-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, AktoZR4AGwVdU0fwkwxWnlxSqatVG+ZQJIVCM27kQD3D6mK9pZFC3EV13S9CZH+0 pcxEENfhAhckku2gDcuGjQ== 0000950116-02-000456.txt : 20020415 0000950116-02-000456.hdr.sgml : 20020415 ACCESSION NUMBER: 0000950116-02-000456 CONFORMED SUBMISSION TYPE: S-3 PUBLIC DOCUMENT COUNT: 10 REFERENCES 429: gov.sec.edgar.dataobjects.object.PDSubFN429Data@56539ac3 REFERENCES 429: gov.sec.edgar.dataobjects.object.PDSubFN429Data@56679ac3 REFERENCES 429: gov.sec.edgar.dataobjects.object.PDSubFN429Data@567b9ac3 REFERENCES 429: gov.sec.edgar.dataobjects.object.PDSubFN429Data@569b9ac3 FILED AS OF DATE: 20020327 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TOLL FINANCE CORP CENTRAL INDEX KEY: 0001095652 STANDARD INDUSTRIAL CLASSIFICATION: OPERATIVE BUILDERS [1531] IRS NUMBER: 232978196 STATE OF INCORPORATION: DE FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: S-3 SEC ACT: 1933 Act SEC FILE NUMBER: 333-85030-01 FILM NUMBER: 02588843 BUSINESS ADDRESS: STREET 1: 3103 PHILMONT AVE CITY: HUNTINGDON VALLEY STATE: PA ZIP: 19006 BUSINESS PHONE: 2159388000 MAIL ADDRESS: STREET 1: 3103 PHILMONT AVENUE CITY: HUNTINGDON VALLEY STATE: PA ZIP: 19006 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FIRST HUNTINGTON FINANCE CORP CENTRAL INDEX KEY: 0001095653 STANDARD INDUSTRIAL CLASSIFICATION: OPERATIVE BUILDERS [1531] STATE OF INCORPORATION: DE FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: S-3 SEC ACT: 1933 Act SEC FILE NUMBER: 333-85030-02 FILM NUMBER: 02588844 BUSINESS ADDRESS: STREET 1: 3103 PHILMONT AVE CITY: HUNTINGDON VALLEY STATE: PA ZIP: 19006 BUSINESS PHONE: 2159388000 MAIL ADDRESS: STREET 1: 3103 PHILMONT AVENUE CITY: HUNTINGDON VALLEY STATE: PA ZIP: 19006 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TOLL BROTHERS INC CENTRAL INDEX KEY: 0000794170 STANDARD INDUSTRIAL CLASSIFICATION: OPERATIVE BUILDERS [1531] IRS NUMBER: 232416878 STATE OF INCORPORATION: DE FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: S-3 SEC ACT: 1933 Act SEC FILE NUMBER: 333-85030 FILM NUMBER: 02588842 BUSINESS ADDRESS: STREET 1: 3103 PHILMONT AVE CITY: HUNTINGDON VALLEY STATE: PA ZIP: 19006 BUSINESS PHONE: 2159388000 MAIL ADDRESS: STREET 1: 3103 PHILMONT AVENUE CITY: HUNTINGDON VALLEY STATE: PA ZIP: 19006 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TOLL CORP CENTRAL INDEX KEY: 0000836623 STANDARD INDUSTRIAL CLASSIFICATION: LAND SUBDIVIDERS & DEVELOPERS (NO CEMETERIES) [6552] IRS NUMBER: 222485860 STATE OF INCORPORATION: DE FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: S-3 SEC ACT: 1933 Act SEC FILE NUMBER: 333-85030-03 FILM NUMBER: 02588845 BUSINESS ADDRESS: STREET 1: 3103 PHILMONT AVE CITY: HUNTINGDON VALLEY STATE: PA ZIP: 19006 BUSINESS PHONE: 2159388000 MAIL ADDRESS: STREET 1: 3103 PHILMONT AVENUE CITY: HUNTINGTON VALLEY STATE: PA ZIP: 19006 S-3 1 b317330_s3.txt As filed with the Securities and Exchange Commission, via EDGAR, on March 27, 2002. Registration Nos. 333-______, 333-______, 333-______ and 333-______. - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ----------------------------- FORM S-3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ----------------------------- TOLL BROTHERS, INC. TOLL CORP. FIRST HUNTINGDON FINANCE CORP. TOLL FINANCE CORP. (Exact name of each registrant as specified in its charter) Delaware ------------ 22-2416878 - Toll Brothers, Inc. (State or other 22-2485860 - Toll Corp. jurisdiction of 23-2485787 - First Huntingdon Finance Corp. incorporation 23-2978196 - Toll Finance Corp. of each registrant) ------------------------------------------- (I.R.S. Employer Identification Number) 3103 Philmont Avenue Huntingdon Valley, Pennsylvania 19006 (215) 938-8000 --------------------------------------------------------------------------- (Address, including zip code, and telephone number, including area code, of registrants' principal executive offices) Robert I. Toll Chairman of the Board and Chief Executive Officer Toll Brothers, Inc. 3103 Philmont Avenue Huntingdon Valley, Pennsylvania 19006 (215) 938-8000 (Name, address, including zip code, and telephone number, including area code, of agent for service) ------------------ Copies to: Mark K. Kessler, Esquire Wolf, Block, Schorr and Solis-Cohen LLP 1650 Arch Street, 22nd Floor Philadelphia, Pennsylvania 19103-2097 (215) 977-2000 ------------------ Approximate date of commencement of proposed sale to the public: From time to time after the effective date of this registration statement. If the only securities being registered on this Form are to be offered pursuant to dividend or interest reinvestment plans, please check the following box. [ ] If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. [X] If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If delivery of the prospectus is expected to be made pursuant to Rule 434 under the Securities Act, please check the following box. [ ] ------------------ CALCULATION OF REGISTRATION FEE
Proposed maximum Proposed maximum aggregate Amount of Title of each class of Amount to be offering price offering registration fee securities to be registered registered (1) per unit (2) price (2) (3) (4) --------------------------- -------------- ---------------- ----------------- ---------------- Common Stock, $.01 par value (5).... Preferred Stock, $.01 par value (6). $750,000,000 100% $750,000,000 $69,000 Warrants (7)........................ Debt Securities (8) (9)............. Guarantees (9)......................
(1) In United States Dollars or the equivalent thereof in one or more foreign currencies or units of two or more foreign currencies or composite currencies, including the European Currency Unit. The aggregate initial offering price of all securities issued from time to time pursuant to this registration statement will not exceed $750,000,000. Such amount represents (i) the issue price of any common stock, (ii) the liquidation preference (or, if different, the issue price) of any preferred stock, (iii) the principal amount of any debt securities issued at their principal amount or the issue price rather than the principal amount of any debt securities issued at an original issue discount, and (iv) the issue price of any warrants (but not the exercise price of any securities issuable upon the exercise of such warrants). (2) Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(o) under the Securities Act of 1933. The proposed maximum offering price per unit will be determined from time to time by the registrant issuing such units or, in the case of an issuance of units which includes a guarantee, by the registrants. (3) No separate consideration will be received for (i) any guarantee or (ii) any common stock, preferred stock or debt securities that may be issuable upon conversion of or in exchange for convertible or exchangeable preferred stock or debt securities (including any securities issuable upon stock splits or similar transactions pursuant to Rule 416 under the Securities Act of 1933). (4) Pursuant to Rule 457(p) under the Securities Act of 1933, we are carrying forward $41,700 of this amount which was previously paid upon the filing by Toll Brothers, Inc., Toll Corp., First Huntingdon Finance Corp. and Toll Finance Corp. of a registration statement on Form S-3 on November 30, 1999 (File Nos. 333-91773, 333-91773-01, 333-91773-02 and 333-91773-03) allocable to $150,000,000 of unsold securities covered thereby which are hereby deemed deregistered. (5) Subject to footnote (1), there are being registered hereunder an indeterminate number of shares of common stock as may be sold, from time to time, by Toll Brothers, Inc. There are also being registered hereunder an indeterminate number of shares of common stock as may be issuable upon conversion of, or in exchange for, or upon exercise of, convertible, exchangeable or exercisable debt securities, preferred stock or warrants. This registration statement also pertains to Rights to Purchase Series A Junior Participating Preferred Stock ("Rights") of Toll Brothers, Inc. Until the occurrence of certain prescribed events, the Rights are not exercisable, will be evidenced by the certificate for the common stock and will be transferred along with and only with the common stock. Upon the occurrence of such events, the Rights will separate from the common stock and separate certificates representing the Rights will be distributed to the holders of the common stock. (6) Subject to footnote (1), there are being registered hereunder an indeterminate number of shares of preferred stock as may be sold, from time to time, by Toll Brothers, Inc. There are also being registered hereunder an indeterminate number of shares of preferred stock as may be issuable upon conversion of, or in exchange for, or upon exercise of, convertible, exchangeable or exercisable debt securities, preferred stock or warrants. (7) Subject to footnote (1), there are being registered hereunder an indeterminate number of warrants as may be sold, from time to time, by Toll Brothers, Inc. entitling the holders thereof to purchase common stock or preferred stock of Toll Brothers, Inc. or debt securities of Toll Corp., First Huntingdon Finance Corp. or Toll Finance Corp. Warrants may be sold separately or as units with common stock or preferred stock of Toll Brothers, Inc. or debt securities of Toll Corp., First Huntingdon Finance Corp. or Toll Finance Corp. (8) Subject to footnote (1), there is being registered hereunder an indeterminate principal amount of debt securities as may be sold, from time to time, by Toll Corp., First Huntingdon Finance Corp. or Toll Finance Corp. There is also being registered hereunder an indeterminate principal amount of such debt securities as may be issuable upon conversion of, or in exchange for, or upon exercise of, convertible, exchangeable or exercisable debt securities, preferred stock or warrants. (9) Each of the debt securities issued by Toll Corp., First Huntingdon Finance Corp. or Toll Finance Corp. will be accompanied by a guarantee to be issued by Toll Brothers, Inc. ------------------ The registrants hereby amend this registration statement on such date or dates as may be necessary to delay its effective date until the registrants shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine. Subject to Completion, dated March 27, 2002 PROSPECTUS [TOLL BROTHERS, INC. LOGO] TOLL BROTHERS, INC. Common Stock Preferred Stock Warrants Guarantees of Debt Securities TOLL CORP. FIRST HUNTINGDON FINANCE CORP. TOLL FINANCE CORP. Debt Securities Toll Brothers, Inc. may offer any of the following securities from time to time: o common stock; o preferred stock; o warrants to purchase common stock or preferred stock issued by Toll Brothers, Inc. or debt securities issued by Toll Corp., First Huntingdon Finance Corp. or Toll Finance Corp.; and o guarantees of debt securities issued by Toll Corp., First Huntingdon Finance Corp. or Toll Finance Corp. Toll Corp., First Huntingdon Finance Corp. and Toll Finance Corp. may offer debt securities from time to time. Toll Corp., First Huntingdon Finance Corp. and Toll Finance Corp. are indirect, wholly-owned subsidiaries of Toll Brothers, Inc. Toll Brothers, Inc.'s common stock is listed on the New York Stock Exchange and the Pacific Exchange under the Symbol "TOL." Each time we offer any of the securities described in this prospectus we will provide a prospectus supplement that will describe the specific price of the securities being offered and the other terms of the offering. You should read this prospectus and the applicable prospectus supplement carefully before you invest. This prospectus may not be used to sell any securities unless it is accompanied by the applicable prospectus supplement. ---------------- Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved these securities or passed on the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. The date of this prospectus is ___________ __, 2002. ***************************************************************************** The following text is to appear vertically in the left margin of cover. The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. ABOUT THIS PROSPECTUS This prospectus describes certain securities of Toll Brothers, Inc., Toll Corp., First Huntingdon Finance Corp. and Toll Finance Corp. This prospectus is part of a registration statement that we filed with the SEC utilizing a "shelf" registration process, which allows us to offer and sell any combination of the securities described in this prospectus in one or more offerings. Using this prospectus, Toll Brothers, Inc., Toll Corp., First Huntingdon Finance Corp. and Toll Finance Corp. may offer up to $750,000,000 worth of securities. This prospectus provides you with a general description of the securities we may offer. Each time we sell securities, we will provide a prospectus supplement that will describe the specific terms of the securities we are offering. Each supplement will also contain specific information about the terms of the offering it describes. The prospectus supplement may also add to, update or change the information contained in this prospectus. In addition, as we describe below in the section entitled "Where You Can Find More Information," Toll Brothers, Inc. has filed and plans to continue to file other documents with the SEC that contain information about it and the business conducted by it and its subsidiaries. Before you decide whether to invest in any of the securities offered by this prospectus, you should read this prospectus, the prospectus supplement that further describes the offering of those securities and the information Toll Brothers, Inc. otherwise files with the SEC. When this prospectus or a supplement to this prospectus uses the words "we," "us" and "our," they refer to Toll Brothers, Inc. and its subsidiaries, including Toll Corp., First Huntingdon Finance Corp. and Toll Finance Corp., unless the context otherwise requires. The phrase "this prospectus" refers to this prospectus and any applicable prospectus supplement, unless the context otherwise requires. WHERE YOU CAN FIND MORE INFORMATION Toll Brothers, Inc. is subject to the informational requirements of the Securities Exchange Act of 1934. In accordance with those requirements, Toll Brothers, Inc. files annual, quarterly and special reports, proxy statements and other information with the SEC. You can read and copy any document Toll Brothers, Inc. files with the SEC at the SEC's public reference room at the following location: Judiciary Plaza 450 Fifth Street, N.W. Washington, D.C. 20549 You may obtain information on the operation of the SEC's public reference room by calling the SEC at 1-800-SEC-0330. The SEC filings of Toll Brothers, Inc. are also available to the public from the SEC's Internet website at http://www.sec.gov. In addition, the common stock of Toll Brothers, Inc. is listed on the New York Stock Exchange and similar information concerning Toll Brothers, Inc. can be inspected and copied at the New York Stock Exchange, 20 Broad Street, 7th Floor, New York, New York 10005. The common stock of Toll Brothers, Inc. is also listed on the Pacific Exchange, but the Pacific Exchange does not have a public reference room for review of SEC filings of its listed companies. The SEC allows us to "incorporate by reference" into this prospectus the information Toll Brothers, Inc. files with the SEC. This means that we are permitted to disclose important information to you by referring you to other documents Toll Brothers, Inc. has filed with the SEC. We incorporate by reference in two ways. First, we list certain documents that Toll Brothers, Inc. has filed with the SEC. The information in these documents is considered part of this prospectus. Second, Toll Brothers, Inc. expects to file additional documents with the SEC in the future. The information in these documents, when filed, will update and supersede the current information included in or incorporated by reference in this prospectus. You should consider any statement contained in this prospectus or in a document which is incorporated by reference into this prospectus to be modified or superseded to the extent that the statement is modified or superseded by another statement contained in a later dated document that constitutes a part of this prospectus or is incorporated by reference into this prospectus. You should consider any statement which is so modified or superseded to be a part of this prospectus only as so modified or superseded. We incorporate by reference in this prospectus all the documents listed below and any filings Toll Brothers, Inc. makes with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 after the date of this prospectus and before all the securities offered by this prospectus have been sold or de-registered: o The annual report on Form 10-K of Toll Brothers, Inc. filed with the SEC for the fiscal year ended October 31, 2001; 2 o The quarterly report on Form 10-Q of Toll Brothers, Inc. filed with the SEC for the fiscal quarter ended January 31, 2002; o The current reports on Form 8-K of Toll Brothers, Inc. filed with the SEC on November 29, 2001, December 6, 2001 and March 5, 2002; o The description of the common stock of Toll Brothers, Inc. contained in its registration statement filed with the SEC on a Form 8-A dated June 19, 1986 registering the common stock under Section 12 of the Securities Exchange Act of 1934; and o The description of preferred stock purchase rights contained in the registration statement of Toll Brothers, Inc. filed with the SEC on June 19, 1997 on Form 8-A, as the same was amended by an amendment filed with the SEC on August 21, 1998 on Form 8-A/A, registering the preferred stock purchase rights under Section 12 of the Securities Exchange Act of 1934. We will deliver, without charge, to anyone receiving this prospectus, upon written or oral request, a copy of any document incorporated by reference in this prospectus but not delivered with this prospectus, but the exhibits to those documents will not be delivered unless they have been specifically incorporated by reference. Requests for these documents should be made to: Director of Investor Relations, Toll Brothers, Inc., 3103 Philmont Avenue, Huntingdon Valley, PA 19006, (215) 938-8000. We will also make available to the holders of the securities offered by this prospectus annual reports which will include audited financial statements of Toll Brothers, Inc. and its consolidated subsidiaries, including Toll Corp., First Huntingdon Finance Corp. and Toll Finance Corp. We do not expect that Toll Corp., First Huntingdon Finance Corp. or Toll Finance Corp. will be required to make filings with the SEC under Section 15(d) of the Securities Exchange Act of 1934. This prospectus is part of our "shelf" registration statement. Toll Brothers, Inc., Toll Corp., First Huntingdon Finance Corp. and Toll Finance Corp. have filed the registration statement with the SEC under the Securities Act of 1933 to register the securities that any of them may offer by this prospectus, including any applicable prospectus supplement. Not all of the information in the registration statement appears in this prospectus, or will appear in any prospectus supplement. You should refer to the registration statement and to the exhibits filed with the registration statement for further information about Toll Brothers, Inc., its consolidated subsidiaries, including Toll Corp., First Huntingdon Finance Corp. and Toll Finance Corp., and the securities offered by this prospectus. TOLL BROTHERS, INC. Toll Brothers, Inc., through its subsidiaries, designs, builds, markets and arranges financing for single-family homes in residential communities that include both detached and attached homes. We market our homes primarily to middle-income and upper-income buyers, catering to move-up, empty nester and age-qualified home buyers. We emphasize high quality construction and consumer satisfaction. We utilize our own land development, architectural, engineering, mortgage, title, security monitoring, landscape, cable TV, broadband Internet access, lumber distribution, house component assembly and manufacturing operations. We also own and operate golf courses in conjunction with several of our master planned communities. We currently operate in twenty-two states in six regions around the country. While we continue to explore additional geographic areas for expansion, our operations are currently conducted in major suburban residential areas of: o southeastern Pennsylvania and Delaware o central New Jersey o the Virginia and Maryland suburbs of Washington, D.C. o Baltimore County, Maryland o the Boston, Massachusetts metropolitan area o Rhode Island o southern New Hampshire 3 o Fairfield and Hartford Counties, Connecticut o Westchester County, New York o the Los Angeles metropolitan area and San Diego, California o the San Francisco Bay area of northern California o Palm Springs, California o the Phoenix, Arizona metropolitan area o Raleigh and Charlotte, North Carolina o Dallas, Austin and San Antonio, Texas o the east and west coasts of Florida o Las Vegas, Nevada o Columbus, Ohio o Nashville, Tennessee o Detroit, Michigan o Chicago, Illinois o Denver, Colorado In recognition of its achievements, Toll Brothers, Inc. has received numerous awards from national, state and local homebuilder publications and associations. Toll Brothers, Inc. is the only publicly traded home builder to have won all three of the industry's highest honors: America's Best Builder (1996), The National Housing Quality Award (1995), and Builder of the Year (1988). Co-founded by Robert I. Toll and Bruce E. Toll, Toll Brothers, Inc. commenced its business operations, through predecessor entities, in 1967. Toll Brothers, Inc. is a Delaware corporation that was formed in May 1986. Toll Corp., First Huntingdon Finance Corp. and Toll Finance Corp. are indirect, wholly-owned subsidiaries of Toll Brothers, Inc. which were incorporated in Delaware in July 1987, July 1987 and October 1998, respectively. Neither Toll Corp., First Huntingdon Finance Corp. nor Toll Finance Corp. has any independent operations or generates any operating revenues other than providing financing to other subsidiaries of Toll Brothers, Inc. by lending the proceeds of its offerings of debt securities and related activities. There is no present intention to have Toll Corp., First Huntingdon Finance Corp. or Toll Finance Corp. engage in other activities. The principal executive offices of Toll Brothers, Inc., Toll Corp., First Huntingdon Finance Corp. and Toll Finance Corp. are located at 3103 Philmont Avenue, Huntingdon Valley, Pennsylvania 19006, and their telephone number is (215) 938-8000. THE HOUSING INDUSTRY Residential real estate developers, including Toll Brothers, Inc., are subject to various risks on the national, regional and local levels. These risks include: o economic recession, o oversupply of homes, 4 o changes in governmental regulation, o adverse weather conditions, o work stoppages and labor disputes, o unforeseen engineering, environmental or geological problems, o litigation related to construction defects, o increases in costs of land, materials and labor, o increases in real estate taxes, and o the unavailability of construction funds or mortgage loans at rates acceptable to builders and home buyers. Our business and earnings are substantially dependent on our ability to obtain financing for our development activities on terms that are acceptable to us. Increases in interest rates increase our construction cost and, to the extent the increase is passed on to our customers in the form of higher prices for our homes, may adversely impact our ability to sell our homes. In addition, increases in interest rates may have an adverse effect on the availability of home financing to our present and potential customers. The housing industry has been subject to increasing environmental, building, zoning and sales regulation by various federal, state and local authorities. This regulation affects construction activities as well as sales activities and other dealings with consumers. In addition, the industry has also seen an increase in state and local legislation authorizing the acquisition of land, mainly by governmental, quasi-public and non-profit entities, as designated open spaces. We must obtain the approval of numerous governmental authorities in connection with our development activities. We may be required to apply for additional approvals or the modification of our existing approvals because of changes in local circumstances or applicable law. Expansion of regulation in the housing industry has increased the time required to obtain the necessary approvals to begin construction and has prolonged the time between the initial acquisition of land or land options and the commencement and completion of construction. USE OF PROCEEDS We intend to use the net proceeds from the sale of the securities offered by this prospectus for general corporate purposes, which may include the acquisition of residential development properties, the repayment of our outstanding indebtedness, working capital or for any other purposes as may be described in an accompanying prospectus supplement. RATIO OF EARNINGS TO FIXED CHARGES The following table shows the ratio of earnings to fixed charges of Toll Brothers, Inc. for the periods indicated:
Three Months Ended Year Ended October 31, January 31, ------------------------------------------------ --------------------------- 1997 1998 1999 2000 2001 2001 2002 ---- ---- ---- ---- ---- ------------ ----------- Ratio, including collateralized 3.81 4.35 3.89 4.53 4.92 4.38 3.66 mortgage financing(1)
- --------------------- (1) For purposes of computing the ratio of earnings to fixed charges, earnings consist of income before income taxes, extraordinary loss and change in accounting plus interest expense and fixed charges except interest incurred. Fixed charges consist of interest incurred (whether expensed or capitalized), the portion of rent expense that is representative of the interest factor, and amortization of debt discount and issuance costs. 5 DESCRIPTION OF DEBT SECURITIES AND GUARANTEES Toll Corp., First Huntingdon Finance Corp. and Toll Finance Corp. may issue debt securities from time to time in one or more series. Any series of debt securities offered by Toll Corp., First Huntingdon Finance Corp. or Toll Finance Corp. will be offered together with the unconditional guarantees of Toll Brothers, Inc. One or more series of the debt securities of Toll Corp., First Huntingdon Finance Corp. or Toll Finance Corp. may be issued under a single indenture. Alternatively, any series of debt securities may be issued under a separate indenture. The terms applicable to each series of debt securities will be stated in the indenture and may be modified by the resolution(s) authorizing that series of debt securities adopted by the board of directors, or an officer or committee of officers authorized by the board of directors, of both the issuer of the debt securities and Toll Brothers, Inc. under the applicable indenture. We refer in this prospectus to the resolution(s) authorizing a series of debt securities as an authorizing resolution. Each indenture under which any debt securities are issued, including the applicable authorizing resolution(s), is referred to in this prospectus as an "indenture," and collectively with any other indentures, as the "indentures." Each indenture will be entered into among Toll Corp., First Huntingdon Finance Corp. or Toll Finance Corp., as the obligor, Toll Brothers, Inc., as the issuer of the related guarantees, and Bank One Trust Company, NA, or another institution named in the applicable prospectus supplement, as trustee. The following is a description of certain general terms and provisions of the debt securities we may offer by this prospectus. The name of the issuer and the particular terms of any series of debt securities we offer, including the extent to which the general terms and provisions may apply to that series of debt securities, will be described in a prospectus supplement relating to those debt securities. Except as otherwise indicated in this prospectus or in the applicable prospectus supplement, the following description of indenture terms is applicable to, and each reference to "the indenture" is a reference to, each indenture that Toll Corp., First Huntingdon Finance Corp. or Toll Finance Corp. may enter into with respect to any series of debt securities we may offer by this prospectus, unless the context otherwise requires. All references to "Section" in the following description refer to the applicable Section of the indenture. The terms of any series of the debt securities include those stated in the applicable indenture. Holders of each series of the debt securities are referred to the indenture for that series, including the applicable authorizing resolution, for a statement of the terms. The respective forms of the indenture for the debt securities of Toll Corp., First Huntingdon Finance Corp. and Toll Finance Corp. are filed as exhibits to the registration statement. Each indenture may be amended or modified for any series of debt securities by an authorizing resolution which will be described in an applicable prospectus supplement, and the applicable authorizing resolution relating to any series of debt securities offered pursuant to this prospectus will be filed as an exhibit to a report incorporated by reference in this prospectus. The following summary of certain provisions of the debt securities and the indenture is not complete. You should read all of the provisions of the indenture, including the definitions contained in the indenture which are not otherwise defined in this prospectus, and the applicable prospectus supplement. Wherever we refer to particular provisions or defined terms of the indenture, these provisions or defined terms are incorporated in this prospectus by reference. General The debt securities, when issued, will be obligations that constitute senior secured debt, senior unsecured debt, senior subordinated debt or subordinated debt of Toll Corp., First Huntingdon Finance Corp. or Toll Finance Corp., as the case may be. Toll Brothers, Inc. will unconditionally guarantee the payment of the principal, premium, if any, and interest on the debt securities when due, whether at maturity, by declaration of acceleration, call for redemption or otherwise. See "Guarantee of Debt Securities." The total principal amount of debt securities which may be issued under the indenture will not be limited. Debt securities may be issued under the indenture from time to time in one or more series. Unless the applicable prospectus supplement relating to the original offering of a particular series of debt securities indicates otherwise, the issuer of that series of debt securities will have the ability to reopen the previous issue of that series of debt securities and issue additional debt securities of that series pursuant to an authorizing resolution, an officers' certificate or an indenture supplement. Because neither Toll Corp., First Huntingdon Finance Corp. nor Toll Finance Corp. has any independent operations or generates any operating revenues, the funds required to pay the principal, the premium, if any, and interest on the debt securities will come from Toll Brothers, Inc. and its other subsidiaries. Except as otherwise stated in the applicable prospectus supplement, there is no legal or contractual restriction on the ability of Toll Brothers, Inc. or the other subsidiaries of Toll Brothers, Inc. to provide these funds. 6 If the debt securities of any series issued by Toll Corp., First Huntingdon Finance Corp. or Toll Finance Corp. will be subordinated to any other indebtedness of that issuer, the indebtedness of that issuer to which that series will be subordinated will be referred to in the applicable authorizing resolution and prospectus supplement as senior indebtedness of Toll Corp., First Huntingdon Finance Corp. or Toll Finance Corp., as the case may be. The applicable authorizing resolution and prospectus supplement will define that senior indebtedness and describe the terms of the subordination. Unless otherwise stated in the applicable prospectus supplement, the payment of principal, premium, if any, and interest on any series of debt securities issued by Toll Corp., First Huntingdon Finance Corp. or Toll Finance Corp. which is subordinated by its terms to other indebtedness of that issuer will be subordinated in right of payment, in the manner and to the extent described in the indenture under which that series is issued, to the prior payment in full of all senior indebtedness of the issuer, as defined in the applicable authorizing resolution and prospectus supplement, whether the senior indebtedness is outstanding on the date of the indenture or is created, incurred, assumed or guaranteed after the date of the indenture. The prospectus supplement relating to any series of debt securities that are offered by this prospectus will name the issuer and describe the specific terms of that series of debt securities. The applicable prospectus supplement will describe, among other things, the following terms, to the extent they are applicable to that series of debt securities: o their title and, if other than denominations of $1,000 and any integral multiple thereof, the denominations in which they will be issuable; o their price or prices (expressed as a percentage of the respective aggregate principal amount of the debt securities) at which they will be issued; o their total principal amount and, if applicable, the terms on which the principal amount of the series may be increased by a subsequent offering of additional debt securities of the same series; o the interest rate (which may be fixed or variable and which may be zero in the case of certain debt securities issued at an issue price representing a discount from the principal amount payable at maturity), the date or dates from which interest, if any, will accrue and the circumstances, if any, in which the issuer may defer interest payments; o any special provisions for the payment of any additional amounts with respect to the debt securities; o any provisions relating to the seniority or subordination of all or any portion of the indebtedness evidenced by the securities to other indebtedness of the issuer; o the date or dates on which principal and premium, if any, are payable or the method of determining those dates; o the dates and times at which interest, if any, will be payable, the record date for any interest payment and the person to whom interest will be payable if other than the person in whose name the debt security is registered at the close of business on the record date for the interest payment; o the place or places where principal, premium, if any, and interest, if any, will be payable; o the terms applicable to any "original issue discount" (as defined in the Internal Revenue Code of 1986, as amended, and the related regulations), including the rate or rates at which the original issue discount will accrue, and any special federal income tax and other considerations; o the right or obligation, if any, of the issuer to redeem or purchase debt securities under any sinking fund or analogous provisions or at the option of a holder of debt securities, or otherwise, the conditions, if any, giving rise to the right or obligation and the period or periods within which, and the price or prices at which and the terms and conditions upon which, debt securities will be redeemed or purchased, in whole or in part, and any provisions for the marketing of the debt securities; o if the amount of payments of principal, premium, if any, and interest, if any, is to be determined by reference to an index, formula or other method, the manner in which these amounts are to be determined and the calculation agent, if any, with respect to the payments; 7 o if other than the principal amount of the debt securities, the portion of the principal amount of the debt securities which will be payable upon declaration or acceleration of the stated maturity of the debt securities pursuant to an "Event of Default," as defined in the applicable indenture; o whether the debt securities will be issued in registered or bearer form and the terms of these forms; o whether the debt securities will be issued in certificated or book-entry form and, if applicable, the identity of the depositary; o any provision for electronic issuance or issuances in uncertificated form; o any listing of the debt securities on a securities exchange; o any events of default or covenants in addition to or in place of those described in this prospectus; o the terms, if any, on which the debt securities will be convertible into or exchangeable for other debt or equity securities, including without limitation the conversion price, the conversion period and any other provisions in addition to or in place of those included in this prospectus; o the collateral, if any, securing payments with respect to the debt securities and any provisions relating to the collateral; o whether and upon what terms the debt securities may be defeased; and o any other material terms of that series of debt securities. (Section 2.03) Guarantee of Debt Securities Toll Brothers, Inc. will unconditionally guarantee the payment of the principal, premium, if any, and interest on the debt securities as they become due, whether at maturity, by declaration of acceleration, call for redemption or otherwise. (Section 7.01). Unless otherwise provided in the applicable prospectus supplement or authorizing resolution, the payment of principal, premium, if any, and interest on the debt securities under the guarantees will be junior in right of payment to the prior payment in full of all senior indebtedness of Toll Brothers, Inc., in the manner and to the extent described in the indenture, whether the senior indebtedness is outstanding on the date of the indenture or is created, incurred, assumed or guaranteed after the date of the indenture. The senior indebtedness of Toll Brothers, Inc. is referred to in the indenture as "Senior Indebtedness of the Guarantor" and may be further defined in the applicable prospectus supplement and authorizing resolution. (Section 7.02). Unless otherwise provided in the applicable prospectus supplement, upon (1) the maturity of any senior indebtedness of Toll Brothers, Inc. by lapse of time, acceleration, unless waived, or otherwise or (2) any distribution of the assets of Toll Brothers, Inc. upon any dissolution, winding up, liquidation or reorganization of Toll Brothers, Inc., the holders of senior indebtedness of Toll Brothers, Inc. will be entitled to receive payment in full before the holders of any then outstanding debt securities of a series offered by this prospectus will be entitled to receive any payment on those debt securities pursuant to the guarantees. Except as otherwise provided in the applicable prospectus supplement, if in any of the situations referred to in (1) or (2) above, a payment is made to the trustee or to holders of the debt securities of a series offered by this prospectus before all senior indebtedness of Toll Brothers, Inc. has been paid in full or provision has been made for payment of all of the senior indebtedness of Toll Brothers, Inc., the payment to the trustee or holders must be paid over to the holders of the senior indebtedness of Toll Brothers, Inc. (Sections 7.03, 7.04). The assets of Toll Brothers, Inc. consist principally of the stock of its subsidiaries. Therefore, the rights of Toll Brothers, Inc. and the rights of its creditors, including the holders of debt securities unconditionally guaranteed by Toll Brothers, Inc., to participate in the assets of any subsidiary other than the issuer of those debt securities upon liquidation, recapitalization or otherwise will be subject to the prior claims of that subsidiary's creditors except to the extent that claims of Toll Brothers, Inc. itself as a creditor of the subsidiary may be recognized. This includes the prior claims of the banks that have provided and are providing to First Huntingdon Finance Corp. a revolving credit facility and a term loan under agreements pursuant to which Toll Brothers, Inc. and its other subsidiaries, including Toll Corp. and Toll Finance Corp., have guaranteed or will guarantee the obligations owing to the banks under the revolving credit facility and the term loan. 8 Conversion of Debt Securities Unless otherwise indicated in the applicable prospectus supplement, the debt securities will not be convertible into common stock of Toll Brothers, Inc. or into any other securities. The particular terms and conditions of the conversion rights of any series of convertible debt securities other than those described below will be described in the applicable prospectus supplement. Unless otherwise indicated in the applicable prospectus supplement, and subject, if applicable, to prior redemption at the option of the issuer of the debt securities, the holders of any series of convertible debt securities will be entitled to convert the principal amount or a portion of the principal amount which is an integral multiple of $1,000 at any time before the date specified in the applicable prospectus supplement for the series of debt securities into shares of common stock of Toll Brothers, Inc. at the conversion price stated in the applicable prospectus supplement, subject to adjustment as described below. (Section 10.02). In the case of any debt security or portion of debt security called for redemption, conversion rights will expire at the close of business on the second business day preceding the redemption date. (Section 10.02). Toll Brothers, Inc. will not be required to issue fractional shares of common stock upon conversion of the debt securities of a convertible series. Instead, Toll Brothers, Inc. will pay a cash adjustment for any fractional interest in a share of its common stock. (Section 10.04). Convertible debt securities surrendered for conversion during the period from the close of business on a "Record Date," as defined in the applicable indenture, or the next preceding "Business Day," as defined in the applicable indenture, if the Record Date is not a Business Day, preceding any "Interest Payment Date," as defined in the applicable indenture, to the opening of business on that Interest Payment Date, other than convertible debt securities or portions of convertible debt securities called for redemption during the period, will be accompanied by payment in next-day funds or other funds acceptable to Toll Brothers, Inc. of an amount equal to the interest payable on the Interest Payment Date on the principal amount of the convertible debt securities then being converted. Except as described in the preceding sentence, no payment or adjustment will be made on convertible debt securities on account of interest accrued on the debt securities surrendered for conversion or for dividends on the common stock delivered on conversion. If an issuer of convertible debt securities defaults on the payment of interest for which payment is made upon the surrender of those convertible debt securities for conversion, the amount so paid will be returned to the party who made the payment. (Section 10.03). The conversion price of the debt securities of a convertible series will be subject to adjustment in certain events, including: o the issuance of common stock of Toll Brothers, Inc. as a dividend or distribution on common stock of Toll Brothers, Inc.; o the subdivision, combination or reclassification of the outstanding common stock of Toll Brothers, Inc.; o the issuance of rights or warrants, expiring within 45 days after the record date for issuance, to the holders of common stock of Toll Brothers, Inc. generally entitling them to acquire shares of common stock of Toll Brothers, Inc. at less than the common stock's then "Current Market Price" as defined in the indenture; o the distribution to holders of common stock of Toll Brothers, Inc. generally of evidences of indebtedness or assets of Toll Brothers, Inc., excluding cash dividends paid from retained earnings and dividends or distributions payable in stock for which adjustment is otherwise made; or o the distribution to the holders of common stock of Toll Brothers, Inc. generally of rights or warrants to subscribe for securities of Toll Brothers, Inc. other than those for which adjustment is otherwise made. (Section 10.05) 9 There will be no upward adjustment in the conversion price except in the event of a reverse stock split. Toll Brothers, Inc. is not required to make any adjustment in the conversion price of less than 1%, but the adjustment will be carried forward and taken into account in the computation of any subsequent adjustment. (Section 10.05). A conversion price adjustment or the failure to make a conversion price adjustment may, under various circumstances, be deemed to be a distribution that could be taxable as a dividend under the Internal Revenue Code to holders of debt securities or to holders of common stock. There will be no adjustments to the conversion price of the debt securities of any convertible series as discussed above in the following situations: o any consolidation or merger to which Toll Brothers, Inc. is a party other than a merger or consolidation in which Toll Brothers, Inc. is the continuing corporation; o any sale or conveyance to another corporation of the property of Toll Brothers, Inc. as an entirety or substantially as an entirety; or o any statutory exchange of securities with another corporation, including any exchange effected in connection with a merger of a third corporation into Toll Brothers, Inc. However, the holder of each convertible debt security outstanding at that time will have the right to convert the debt security into the kind and amount of securities, cash or other property which the holder would have owned or have been entitled to receive immediately after the transaction if the debt security was converted immediately before the effective date of the transaction. (Section 10.10). Form, Exchange, Registration, Conversion, Transfer and Payment Unless otherwise indicated in the applicable prospectus supplement: o each series of debt securities will be issued in registered form only, without coupons; o payment of principal, premium, if any, and interest, if any, on each series of the debt securities will be payable at the office or agency of the issuer of that series maintained for this purpose (Section 2.05); and o the exchange, conversion and transfer of each series of debt securities may be registered at the office or agency of the issuer of that series maintained for this purpose and at any other office or agency maintained for this purpose. (Section 2.05). Subject to various exceptions described in the indenture, the issuer of each series of debt securities will be entitled to charge a reasonable fee for the registration of transfer or exchange of the debt securities of that series, including an amount sufficient to cover any tax or other governmental charge imposed or expenses incurred in connection with the transfer or exchange. (Section 2.08). All payments made by the issuer of a series of debt securities to the trustee and paying agent for the payment of principal, premium, if any, and interest on the debt securities of that series which remain unclaimed for two years after the principal, premium, if any, or interest has become due and payable may be repaid to the issuer. Afterwards, the holder of the debt security may look only to the issuer or, if applicable, Toll Brothers, Inc., for payment. (Section 11.03). Registered Global Securities The registered debt securities of a series may be issued in whole or in part in the form of one or more registered global debt securities. A registered global security is a security, typically held by a depositary, that represents the beneficial interests of a number of purchasers of the security. Any registered global debt securities will be deposited with and registered in the name of a depositary or its nominee identified in the applicable prospectus supplement. In this case, one or more registered global securities will be issued, each in a denomination equal to the portion of the total principal amount of outstanding registered debt securities of the series to be represented by the registered global security. (Section 2.14). 10 Unless and until a registered global security is exchanged in whole or in part for debt securities in definitive registered form, it may not be transferred except as a whole: o by the depositary for the registered global security to a nominee for the depository; o by a nominee of the depositary to the depositary or to another nominee of the depositary; or o by the depositary or its nominee to a successor depositary or a nominee of a successor depositary. (Section 2.14). The prospectus supplement relating to a particular series of debt securities will describe the specific terms of the depositary arrangement involving any portion of a series of debt securities to be represented by a registered global security. We anticipate that the following provisions will apply to all depositary arrangements for debt securities: o ownership of beneficial interests in a registered global security will be limited to persons that have accounts with the depositary for the registered global security (each a "participant" and, collectively, the "participants") or persons holding interests through the participants; o after the issuer of a series of debt securities issues the registered global security for the series, the depositary will credit, on its book-entry registration and transfer system, the participants' accounts with the respective principal amounts of the debt securities of that series represented by the registered global security beneficially owned by the participants; o the underwriters, agents or dealers participating in the distribution of the debt securities will designate the accounts to be credited; o only a participant or a person that may hold an interest through a participant may be the beneficial owner of a registered global security; and o ownership of beneficial interests in the registered global security will be shown on, and the transfer of that ownership interest will be effected only through, records maintained by the depositary for the registered global security for interests of the participants, and on the records of the participants for interests of persons holding through the participants. The laws of some states may require that specified purchasers of securities take physical delivery of the securities in definitive form. These laws may limit the ability of those persons to own, transfer or pledge beneficial interests in registered global securities. So long as the depositary for a registered global security, or its nominee, is the registered owner of the registered global security, the depositary or its nominee, as the case may be, will be considered the sole owner or holder of the debt securities represented by the registered global security for all purposes under the indenture. Except as stated below, owners of beneficial interests in a registered global security: o will not be entitled to have the debt securities represented by a registered global security registered in their names; o will not receive or be entitled to receive physical delivery of the debt securities in definitive form; and o will not be considered the owners or holders of the debt securities under the indenture. Accordingly, each person owning a beneficial interest in a registered global security must rely on the procedures of the depositary for the registered global security and, if the person is not a participant, on the procedures of the participant through which the person owns its interests, to exercise any rights of a holder under the indenture applicable to the registered global security. We understand that under existing industry practices, if we request any action of holders, or if an owner of a beneficial interest in a registered global security desires to give or take any action which a holder is entitled to give or take under the indenture, the depositary for the registered global security would authorize the participants holding the relevant beneficial interests to give or take the action, and the participants would authorize beneficial owners owning through the participants to give or take the action or would otherwise act upon the instructions of beneficial owners holding through them. 11 Principal, premium, if any, and interest payments on debt securities represented by a registered global security registered in the name of a depositary or its nominee will be made to the depositary or its nominee, as the case may be, as the registered owner of the registered global security. None of the issuer of a series of debt securities, Toll Brothers, Inc., the trustee under the indenture nor any agent of any of them will be responsible or liable for any aspect of the records relating to, or payments made on account of, beneficial ownership interests in the registered global security for the series or for maintaining, supervising or reviewing any records relating to the beneficial ownership interests. We expect that the depositary for any debt securities represented by a registered global security, upon receipt of any payment of principal, premium, if any, or interest in respect of the registered global security, will immediately credit participants' accounts with payments in amounts proportionate to their respective beneficial interests in the principal amount of the registered global security as shown on the depositary's records. We also expect that payments by participants to owners of beneficial interests in a registered global security held through the participants will be governed by standing customer instructions and customary practices, as is now the case with the securities held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of the participants. If the depositary for any debt securities represented by a registered global security is at any time unwilling or unable to continue as depositary or ceases to be a clearing agency registered under the Securities Exchange Act of 1934, Toll Brothers, Inc. will appoint an eligible successor depositary. If Toll Brothers, Inc. fails to appoint an eligible successor depositary within 90 days, the debt securities will be issued in definitive form in exchange for the registered global security. In addition, Toll Brothers, Inc. may at any time and in its sole discretion determine not to have any debt securities of a series represented by one or more registered global securities. In that event, debt securities of that series will be issued in definitive form in exchange for each registered global security representing the debt securities. Any debt securities issued in definitive form in exchange for a registered global security will be registered in such name or names as the depositary instructs the trustee. We expect that the instructions will be based upon directions received by the depositary from the participants with respect to ownership of beneficial interests in the registered global security. Events of Default, Notice and Waiver Unless otherwise indicated in the applicable prospectus supplement, each of the following events will be an "Event of Default" with respect to each series of debt securities issued under the indenture: o Toll Brothers, Inc. or the issuer of that series of debt securities fails to pay interest due on any debt securities of that series for 30 days; o Toll Brothers, Inc. or the issuer of that series of debt securities fails to pay the principal of any debt securities of that series when due; o Toll Brothers, Inc. or the issuer of that series of debt securities fails to perform any other agreements contained in the debt securities of that series or in the guarantee relating to that series of debt securities or contained in the indenture for that series of debt securities and applicable to that series for a period of 60 days after the issuer's receipt of notice of the default from the trustee under the indenture or from the holders of at least 25% in principal of the debt securities of that series; o default in the payment of indebtedness of the issuer of that series of debt securities, Toll Brothers, Inc. or any "Subsidiary" (as defined in the indenture) of Toll Brothers, Inc., including Toll Corp., First Huntingdon Finance Corp. or Toll Finance Corp., under the terms of the instrument evidencing or securing that indebtedness which permits the holder of that indebtedness to: o accelerate the payment of an aggregate of more than $10,000,000 in principal amount of the indebtedness, after the lapse of applicable grace periods; or 12 o in the case of defaults other than payment defaults, accelerate the indebtedness and the acceleration is not rescinded or annulled within 10 days after the acceleration, provided that, subject to certain limitations described in the indenture, the term "indebtedness" does not include for this purpose an acceleration of or default on certain "Non-Recourse Indebtedness," as that term is defined in the indenture and described below; o a final judgment for the payment of money in an amount in excess of $10,000,000 is entered against the issuer of that series of debt securities, Toll Brothers, Inc. or any Subsidiary (as defined in the indenture) of Toll Brothers, Inc., including Toll Corp., First Huntingdon Finance Corp. or Toll Finance Corp., which remains undischarged for a period of 60 days after the date on which the right to appeal has expired, during which period execution is not effectively stayed, provided that the term "final judgment" will not include a "Non-Recourse Judgment," as that term is defined in the indenture and described below, unless the book value of all property, net of any previous write downs or reserves in respect of the property, subject to the Non-Recourse Judgment exceeds the amount of the Non-Recourse Judgment by more than $10,000,000; o an "Event of Default," as that term is defined in the indenture relating to Toll Corp.'s 8 3/4% Senior Subordinated Notes due 2006, 7 3/4% Senior Subordinated Notes due 2007, 8 1/8% Senior Subordinated Notes due 2009, 8% Senior Subordinated Notes due 2009, or 8 1/4% Senior Subordinated Notes due 2011 (each of these series of notes being referred to below as an "Outstanding Series"), occurs, provided that on the date of the occurrence, the outstanding principal amount of at least one Outstanding Series to which the occurrence relates exceeds $5,000,000; o any one of various events of bankruptcy, insolvency or reorganization specified in the indenture occurs with respect to Toll Brothers, Inc. or the issuer of that series of debt securities; or o the guarantee of Toll Brothers, Inc. relating to that series of debt securities ceases to be in full force and effect for any reason other than in accordance with its terms. (Section 8.01). "Non-Recourse Indebtedness," as defined in the indenture, means indebtedness or other obligations secured by a lien on property to the extent that the liability for the indebtedness or other obligations is limited to the security of the property without liability on the part of Toll Brothers, Inc. or any subsidiary (other than the subsidiary which holds title to the property) for any deficiency. (Section 1.01). "Non-Recourse Judgment," as defined in the indenture, means a judgment in respect of indebtedness or other obligations secured by a lien on property to the extent that the liability for (1) the indebtedness or other obligations and (2) the judgment is limited to the property without liability on the part of Toll Brothers, Inc. or any subsidiary (other than the subsidiary which holds title to the property) for any deficiency. (Section 1.01). The trustee is required to give notice to the holders of any series of debt securities within 90 days of a default with respect to that series of debt securities under the indenture. However, the trustee may withhold notice to the holders of any series of debt securities, except in the case of a default in the payment of principal, premium, if any, or interest, if any, with respect to that series, if the trustee considers the withholding to be in the interest of the holders. (Section 9.05). If an Event of Default occurs and is continuing for a series of debt securities, other than an Event of Default resulting from certain events of bankruptcy, insolvency or reorganization with respect to Toll Brothers, Inc. or the issuer of that series of debt securities, either the trustee or the holders of at least 25% in principal amount of all of the outstanding debt securities of that series may, by giving an acceleration notice to the issuer of that series of debt securities, declare the unpaid principal of and accrued and unpaid interest on all of the debt securities of that series to be due and payable if, with respect to debt securities of that series (1) (a) no designated senior debt of Toll Brothers, Inc. or the issuer of that series of debt securities is outstanding, or (b) if the debt securities of that series are not subordinated to other indebtedness of the issuer of that series of debt securities, immediately; or (2) if designated senior debt of Toll Brothers, Inc. or the issuer of that series of debt securities is outstanding and the debt securities of that series are junior to other indebtedness of the issuer of that series of debt securities, upon the earlier of (A) ten days after the acceleration notice is received by the issuer of that series of debt securities or (B) the acceleration of any senior indebtedness of Toll Brothers, Inc. or the issuer of that series of debt securities. The designated senior debt of Toll Brothers, Inc. is referred to in the indenture as "Designated Senior Debt of the Guarantor" and the designated senior debt of Toll Corp., First Huntingdon Finance Corp. or Toll Finance Corp., as the case may be, is referred to in the indenture for that issuer's debt securities as "Designated Senior Debt of the Company," and each, as defined in the indenture, may be further defined in the applicable prospectus supplement. (Section 8.02). 13 If an Event of Default occurs with respect to a series of debt securities as a result of certain events of bankruptcy, insolvency or reorganization with respect to Toll Brothers, Inc. or the issuer of that series of debt securities, then the unpaid principal amount of all of the debt securities of that series outstanding and any accrued and unpaid interest will automatically become due and payable immediately without any declaration or other act by the trustee or any holder of debt securities of that series. (Section 8.02). At any time after a declaration of acceleration with respect to debt securities of any series has been made, but before a judgment or decree based on acceleration has been obtained, the holders of a majority in principal amount of the outstanding debt securities of that series may rescind the acceleration, provided that, among other things, all Events of Default with respect to the particular series, other than payment defaults caused by the acceleration, have been cured or waived as provided in the indenture. (Section 8.02). The holders of a majority in outstanding principal amount of the debt securities of a particular series may generally waive an existing default with respect to that series and its consequences in accordance with terms and conditions provided in the indenture. However, these holders may not waive a default in the payment of the principal, any premium or any interest on the debt securities. (Section 8.04). Toll Brothers, Inc. and any issuer of debt securities offered by this prospectus will be required to file annually with the trustee under the indenture a certificate, signed by an officer of Toll Brothers, Inc. and the issuer, stating whether or not the officer knows of any default under the terms of the indenture and providing a description of any default of which the officer has knowledge. (Section 4.03). Redemption The prospectus supplement relating to a series of redeemable debt securities will describe the rights or obligations of the issuer to redeem those debt securities and the procedure for redemption. (Section 3). Additional Provisions Subject to the duty of the trustee to act with the required standard of care during a default, the indenture provides that the trustee will be under no obligation to perform any duty or to exercise any of its rights or powers under the indenture, unless the trustee receives indemnity satisfactory to it against any loss, liability or expense. (Section 9.01). Subject to these provisions for the indemnification of the trustee and various other conditions, the holders of a majority in total principal amount of the outstanding debt securities of any series will have the right to direct the time, method and place of conducting any proceeding for any remedy available to the trustee, or exercising any trust or power conferred on the trustee, with respect to the debt securities of that series. (Section 8.05). A holder of debt securities of a series will not have the right to pursue any remedy with respect to the indenture or the debt securities of that series, unless: o the holder gives to the trustee written notice of a continuing Event of Default; o the holders of not less than 25% in total principal amount of the outstanding debt securities of that series make a written request to the trustee to pursue the remedy; o the holder offers the trustee indemnity satisfactory to it against any loss, liability or expense; o the trustee fails to comply with the holder's request within 60 days after receipt of the written request and offer of indemnity; and o the trustee, during the same 60-day period, has not received from the holders of a majority in principal amount of the outstanding debt securities of that series a direction inconsistent with the aforementioned written request of holders. (Section 8.06). 14 However, the holder of any debt security will have an absolute right to receive payment of the principal of and interest on that debt security on or after the respective due dates expressed in that debt security and to bring suit for the enforcement of any payment. (Section 8.07). Covenants The prospectus supplement relating to the debt securities of any series will describe any special covenants applicable to the issuer of the series or Toll Brothers, Inc. with respect to that series. (Section 4). Merger or Consolidation Neither Toll Brothers, Inc. nor the issuer of a series of debt securities offered by this prospectus may consolidate with or merge into, or transfer all or substantially all of its assets to, any other person without the written consent of the holders of a majority in outstanding principal amount of the debt securities of that series, unless: o the 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 Toll Brothers, Inc. or the issuer, as the case may be, under the indenture and either the guarantees or the debt securities, as the case may be; and o immediately after giving effect to the transaction no "Default" or "Event of Default," as these terms are defined in the indenture, has occurred and is continuing. Afterwards, all of the obligations of the predecessor corporation will terminate. (Section 5.01). Modification of an Indenture The respective obligations of Toll Brothers, Inc. and the issuer of debt securities of any series offered by this prospectus and the rights of the holders of those debt securities under the indenture generally may be modified with the written consent of the holders of a majority in outstanding principal amount of the debt securities of all series under the indenture affected by the modification. However, without the consent of each affected holder of debt securities, no amendment, supplement or waiver may: o reduce the amount of debt securities whose holders must consent to an amendment, supplement or waiver; o reduce the rate or extend the time for payment of interest on the debt securities; o reduce the principal amount of, or premium on, the debt securities; o extend the maturity of any debt securities; o change the redemption provisions; o waive a default in the payment of the principal, premium, if any, or interest on any series of debt securities; o modify the subordination or guarantee provisions in a manner adverse to holders of any series of debt securities; o make the medium of payment other than that stated in the debt securities; o make a change that adversely affects the right to convert or the conversion price for any series of convertible debt securities; o make any change in the right of any holder of debt securities to receive payment of principal of, premium, if any, and interest on those debt securities, or to bring suit for the enforcement of any of these payments; and 15 o change the provisions regarding modifications to the indenture or waiver of Defaults or Events of Default that will be effective against any holders of any series of debt securities. (Section 12.02). Governing Law The indenture, the debt securities and the guarantees will be governed by the laws of the State of New York. (Section 13.09). Satisfaction and Discharge of Indenture Unless otherwise provided in the applicable authorizing resolution and prospectus supplement, the indenture will be discharged: o upon payment of all the series of debt securities issued under the indenture; or o upon deposit with the trustee, within one year of the date of maturity or redemption of all of the series of debt securities issued under the indenture, of funds sufficient for (a) the payment of principal of and interest on the securities to maturity or (b) redemption of the securities. (Section 11.01). Reports to Holders of Debt Securities Toll Brothers, Inc. and each issuer of the debt securities offered by this prospectus will file with the trustee copies of their annual reports and other information, documents and reports that they file with the SEC. So long as the obligation of Toll Brothers, Inc. to file these reports or information with the SEC is suspended or terminated, Toll Brothers, Inc. will provide the trustee with audited annual financial statements prepared in accordance with generally accepted accounting principles and unaudited condensed quarterly financial statements. These financial statements will be accompanied by management's discussion and analysis of the results of operations and financial condition of Toll Brothers, Inc. for the period reported upon in substantially the form required under the rules and regulations of the SEC then in effect. (Section 4.02). 16 DESCRIPTION OF CAPITAL STOCK The authorized capital stock of Toll Brothers, Inc. consists of 100,000,000 shares of common stock, $.01 par value per share, and 1,000,000 shares of preferred stock, $.01 par value per share; however, subject to the limitations and procedures described below, the stockholders of Toll Brothers, Inc. have authorized increases in the respective numbers of shares of common stock and preferred stock. In March 2001, the stockholders of Toll Brothers, Inc. authorized the filing by the Board of Directors, in its discretion, of one or more amendments to the Certificate of Incorporation from time to time on or before March 31, 2006 (1) to increase the authorized common stock by up to 155,000,000 additional shares in any combination of one or more 5,000,000-share increments and/or (2) to increase the authorized preferred stock by a single increment of 14,000,000 additional shares. On March 7, 2002, the Board of Directors filed an amendment to the Certificate of Incorporation, in accordance with this stockholder authorization, which amendment increased the authorized shares of common stock from 45,000,000 shares to 100,000,000 shares. If additional amendments increasing the authorized capital stock of Toll Brothers, Inc. to the maximum limits authorized by the stockholders are filed by March 31, 2006, the authorized common stock of Toll Brothers, Inc. will be increased to 200,000,000 shares and the authorized preferred stock of Toll Brothers, Inc. will be increased to 15,000,000 shares. The procedure was approved by stockholders to permit Toll Brothers, Inc. to reduce the amount of annual Delaware corporate franchise tax that it is required to pay, while giving the Board of Directors the flexibility to increase quickly the authorized shares of common or preferred stock without the necessity of further action by the stockholders. Common Stock Subject to the rights and preferences of any holders of the preferred stock of Toll Brothers, Inc., none of which is currently outstanding, the holders of the common stock of Toll Brothers, Inc. are entitled to one vote per share on all matters which require a vote of the common stockholders. In addition, the holders of the common stock of Toll Brothers, Inc. are entitled to receive dividends as legally may be declared by the board of directors and to receive pro rata the net assets of Toll Brothers, Inc. upon liquidation. There are no cumulative voting, preemptive, conversion or redemption rights applicable to the common stock of Toll Brothers, Inc. Persons casting a majority of the votes in the election of directors will be entitled to elect all of the directors. On June 12, 1997, the board of directors of Toll Brothers, Inc. adopted a Stockholder Rights Plan. This Stockholder Rights Plan originally provided for one right to attach to each share of the common stock of Toll Brothers, Inc. In March 2002, Toll Brothers, Inc. declared a 2-for-1 split of its common stock to be effected in the form of a stock dividend. In connection with the common stock split and in accordance with the terms of the Stockholder Rights Plan, the right associated with each share of common stock was adjusted so that one-half of a right will now attach to each share of common stock. Upon the occurrence of certain events, each right entitles the registered holder to purchase from Toll Brothers, Inc. a unit consisting of one one-thousandth of a share of Series A Junior Participating Preferred Stock of Toll Brothers, Inc. at a purchase price of $100 per unit. Initially the rights attach to all common stock certificates and no separate rights certificates will be distributed. The rights will separate from the common stock and a distribution date will occur upon the earlier of: o 10 days following a public announcement that a person or group of affiliated persons has acquired beneficial ownership of 15% or more of the outstanding shares of common stock of Toll Brothers, Inc.; or o 10 business days following the commencement of a tender offer that would result in a person or group beneficially owning 15% or more of the outstanding shares of common stock of Toll Brothers, Inc. The rights are not exercisable until the distribution date and will expire at the close of business on July 11, 2007. In the event any non-exempt person or group acquires 15% or more of the then outstanding shares of common stock, unless the acquisition is made pursuant to a tender offer for all outstanding shares at a price determined by a majority of the directors of Toll Brothers, Inc. who are not officers of Toll Brothers, Inc. to be fair and otherwise in the best interest of Toll Brothers, Inc. and its stockholders, each holder of a right will have the right to receive, upon exercise, common stock having a value equal to two times the exercise price of the right; except that the rights held by a non-exempt person or group become null and void upon that person or group acquiring 15% or more of the then outstanding shares of common stock. At any time until 10 days following the stock acquisition date, Toll Brothers, Inc. may redeem the rights at a price of $.001 per right. The Rights Agreement establishing the Stockholder Rights Plan was filed with the SEC on June 19, 1997 as an exhibit to a registration statement on Form 8-A. An amendment to the Rights Agreement was filed with the SEC on August 21, 1998 as an exhibit to an amended registration statement on Form 8-A/A. This summary of the rights is not complete. For additional information, holders of the common stock of Toll Brothers, Inc. should read the Rights Agreement and the amendment to that agreement, which are incorporated by reference in this prospectus. 17 The common stock of Toll Brothers, Inc. is traded on the New York Stock Exchange and the Pacific Exchange under the symbol "TOL." Preferred Stock General. Toll Brothers, Inc. may issue, from time to time, shares of one or more series of preferred stock. We have summarized below the general terms and provisions that will apply to any preferred stock that may be offered, except as otherwise described by the applicable prospectus supplement. When Toll Brothers, Inc. offers to sell a particular series of preferred stock, a prospectus supplement will describe the specific terms of that series of preferred stock. If any of the general terms and provisions described in this prospectus apply to the particular series of preferred stock, the applicable prospectus supplement will so indicate and will describe any alternative provisions that are applicable. The preferred stock will be issued under a certificate of designations relating to each series of preferred stock, and is also subject to the Toll Brothers, Inc. Certificate of Incorporation, as amended. The following summary of various provisions of the preferred stock is not complete. You should read Toll Brothers, Inc.'s Certificate of Incorporation, as amended, and each certificate of designations relating to a specific series of preferred stock for additional information. Each certificate of designations relating to a specific series of preferred stock will be filed as an exhibit to, or will be incorporated by reference in, the registration statement at or prior to the time of issuance of the particular series of preferred stock. The board of directors of Toll Brothers, Inc. is authorized to issue shares of preferred stock, in one or more series, and to fix for each series voting powers and the preferences and relative, participating, optional or other special rights and the qualifications, limitations or restrictions, that are permitted by the Delaware General Corporation Law. The board of directors of Toll Brothers, Inc. is authorized to determine the following terms for each series of preferred stock, which will be described in the applicable prospectus supplement: o the number of shares and their designation and title; o the dividend rate or the method of calculating the dividend rate, if applicable; o the priority as to payment of dividends; o the dividend periods or the method of calculating the dividend periods, if applicable; o the voting rights, if any; o the liquidation preference and the priority as to payment of the liquidation preference upon any liquidation or winding-up of Toll Brothers, Inc.; o whether and on what terms the shares will be subject to redemption or repurchase at the option of Toll Brothers, Inc.; o whether and on what terms the shares will be convertible into or exchangeable for other debt or equity securities; o whether the shares will be listed on a securities exchange; and 18 o the other rights and privileges and any qualifications, limitations or restrictions relating to the shares. Dividends. Holders of preferred stock will be entitled to receive cash dividends if declared by the board of directors of Toll Brothers, Inc. out of funds which Toll Brothers, Inc. may legally use for payment. The applicable prospectus supplement will identify the dividend rates and the dates on which Toll Brothers, Inc. will pay dividends. Unless otherwise described in the applicable prospectus supplement, each series of preferred stock will rank junior as to dividends to any series of preferred stock that may be issued in the future that is expressly senior as to dividends to the earlier series of the preferred stock. If at any time Toll Brothers, Inc. has failed to pay accrued dividends on any senior series of preferred stock at the time dividends are payable on a junior series of preferred stock, Toll Brothers, Inc. may not pay any dividend on the junior series of preferred stock or redeem or otherwise repurchase shares of the junior series of preferred stock until the accumulated but unpaid dividends on the senior series have been paid or set aside for payment in full by Toll Brothers, Inc. Unless otherwise described in the applicable prospectus supplement: o no dividends, other than in common stock or other capital stock ranking junior to the preferred stock of any series as to dividends and upon liquidation, may be declared or paid or set aside for payment; and o no distribution may be declared or made upon the common stock, or any other capital stock of Toll Brothers, Inc. ranking junior to or equally with the preferred stock of the particular series as to dividends. In addition, unless otherwise described in the applicable prospectus supplement, no common stock or any other capital stock of Toll Brothers, Inc. ranking junior to or equally with the preferred stock of the particular series as to dividends may be redeemed, purchased or otherwise acquired for any consideration and no monies may be paid to or made available for a sinking fund for the redemption of any shares of any such stock by Toll Brothers, Inc. except by conversion into or exchange for other capital stock of Toll Brothers, Inc. ranking junior to the preferred stock of the particular series as to dividends unless: o if the series of preferred stock has a cumulative dividend, full cumulative dividends on the preferred stock of the series have been or contemporaneously are declared and paid or declared and an amount sufficient for the payment of the dividends has been set apart for all past dividend periods and the then current dividend period; or o if the particular series of preferred stock does not have a cumulative dividend, full dividends on the preferred stock of the series have been or contemporaneously are declared and paid or declared and an amount sufficient for the payment of the dividends has been set apart for payment for the then current dividend period; provided, however, that any monies deposited up until that time in any sinking fund with respect to any preferred stock of Toll Brothers, Inc. in compliance with the provisions of the sinking fund may subsequently be applied to the purchase or redemption of the preferred stock in accordance with the terms of the sinking fund, regardless of whether at the time of the application full cumulative dividends upon shares of the preferred stock outstanding on the last dividend payment date have been paid or declared and set apart for payment; and provided, further, that any of the junior or equally-ranked classes of preferred stock or common stock of Toll Brothers, Inc. may be converted into or exchanged for stock of Toll Brothers, Inc. ranking junior to the series of preferred stock then senior to the junior or equally-ranked classes of preferred stock as to dividends. The amount of dividends payable for the initial dividend period or any period shorter than a full dividend period will be computed on the basis of a 360-day year of twelve 30-day months. Accrued but unpaid dividends will not bear interest. Convertibility. No series of preferred stock will be convertible or exchangeable for other securities or property unless otherwise stated in the applicable prospectus supplement. Redemption and Sinking Fund. Toll Brothers, Inc. will not have the right or obligation to redeem or pay into a sinking fund for the benefit of any series of preferred stock unless otherwise stated in the applicable prospectus supplement. 19 Liquidation Rights. Unless otherwise stated in the applicable prospectus supplement, in the event of any liquidation, dissolution or winding-up of Toll Brothers, Inc., holders of each series of preferred stock will be entitled to receive the liquidation preference per share specified in the applicable prospectus supplement for that particular series of preferred stock plus any accrued and unpaid dividends. Toll Brothers, Inc. will pay these amounts to the holders of each series of the preferred stock and all amounts owing on any preferred stock ranking equally with that series of preferred stock as to distributions. These payments will be made out of the assets of Toll Brothers, Inc. available for distribution to stockholders before any distribution is made to holders of common stock or any other shares of preferred stock of Toll Brothers, Inc. ranking junior to the series of preferred stock as to rights upon liquidation, dissolution or winding-up. In the event that there are insufficient funds to pay in full the amounts payable to all equally-ranked classes of preferred stock, Toll Brothers, Inc. will allocate the remaining assets equally among all series of equally-ranked preferred stock in proportion to the full respective preferential amounts to which they are entitled. Unless otherwise specified in a prospectus supplement for a series of preferred stock, after Toll Brothers, Inc. pays the full amount of the liquidation distribution to which they are entitled, the holders of shares of a series of preferred stock will not be entitled to participate in any further distribution of the assets of Toll Brothers, Inc. The consideration or merger of Toll Brothers, Inc. with another corporation or sale of securities will not be considered a liquidation, dissolution or winding-up of Toll Brothers, Inc. for these purposes. Voting Rights. Holders of preferred stock will not have any voting rights except as described in the applicable prospectus supplement or as otherwise from time to time required by law. Miscellaneous. When the preferred stock is issued, it will be fully paid and nonassessable. Holders of preferred stock will have no preemptive rights. If Toll Brothers, Inc. redeems or otherwise reacquires any shares of preferred stock, it will restore the shares to the status of authorized and unissued shares of preferred stock. These shares will not be a part of any particular series of preferred stock and Toll Brothers, Inc. may reissue the shares. There are no restrictions on repurchase or redemption of the preferred stock on account of any arrearage on sinking fund installments, except as may be described in an applicable prospectus supplement. Payment of dividends on any series of preferred stock may be restricted by loan agreements, indentures or other agreements entered into by Toll Brothers, Inc. The accompanying prospectus supplement will describe any material contractual restrictions on dividend payments. The prospectus supplement will also describe any material United States federal income tax considerations applicable to the preferred stock. No Other Rights. The shares of a series of preferred stock will not have any preferences, voting powers or relative, participating, optional or other special rights except for those described above or in the applicable prospectus supplement, the Certificate of Incorporation, as amended, or the applicable certificate of designations, or as otherwise required by law. Transfer Agent and Registrar. The prospectus supplement for each series of preferred stock will identify the transfer agent and registrar. 20 DESCRIPTION OF WARRANTS General Toll Brothers, Inc. may issue, together with other securities offered by this prospectus or separately, warrants for the purchase of the following: o debt securities of Toll Corp., First Huntingdon Finance Corp. or Toll Finance Corp. with the unconditional guarantees of Toll Brothers, Inc.; o common stock of Toll Brothers, Inc.; or o preferred stock of Toll Brothers, Inc. Each series of warrants will be issued under a separate warrant agreement to be entered into between Toll Brothers, Inc. and a bank or trust company, as warrant agent. The terms of each warrant agreement will be discussed in the applicable prospectus supplement relating to the particular series of warrants. Copies of the form of agreement for each warrant, including the forms of certificates representing the warrants, reflecting the provisions to be included in these agreements for a particular offering will be, in each case, filed with the SEC as an exhibit to a document incorporated by reference in the registration statement of which this prospectus is a part prior to the date of any prospectus supplement relating to an offering of the particular warrant. We have summarized below the general terms and provisions that will apply to any warrants that may be offered, except as otherwise described by the applicable prospectus supplement. When Toll Brothers, Inc. offers to sell warrants, a prospectus supplement will describe the specific terms of that series of warrants. If any of the general terms and provisions described in this prospectus do not apply to the particular series of warrants being offered the applicable prospectus supplement will so indicate and will describe any alternative provisions that are applicable. The following summary of various provisions of the warrants, the warrant agreements and the warrant certificates is not complete. You should read all of the provisions of the applicable warrant agreement and warrant certificate, including the definitions contained in those documents of various terms, for additional important information concerning any series of warrants offered by this prospectus. Debt Warrants General. The prospectus supplement relating to any series of debt warrants that are offered by this prospectus will describe the specific terms of that series of debt warrants, any related debt warrant agreement and the debt warrant certificate(s) representing the debt warrants. The applicable prospectus supplement will describe, among other things, the following terms, to the extent they are applicable to that series of debt warrants: o the issuer of the debt securities which may be purchased upon exercise of the debt warrants, the designation, number, stated value and terms of those debt securities, the terms of the related guarantees and the procedures and conditions relating to the exercise of the debt warrants; o the designation and terms of any debt securities and related guarantees with which the debt warrants are issued and the number of the debt warrants issued with each debt security; o the date, if any, on and after which the debt warrants and the related debt securities will be separately transferable; o the principal amount of debt securities which may be purchased upon exercise of each debt warrant and the price at which the principal amount of debt securities may be purchased upon exercise of the debt warrant; o the date on which the right to exercise the debt warrants will begin and the date on which the right will expire; o a discussion of the material United States federal income tax considerations relevant to the exercise of the debt warrants; 21 o whether the debt warrants represented by the debt warrant certificates will be issued in registered or bearer form, and, if registered, where they may be transferred and registered; o call provisions, if any, of the debt warrants; and o any other material terms of the debt warrants. Debt warrant certificates will be exchangeable for new debt warrant certificates of different denominations. In addition, debt warrants may be exercised at the corporate trust office of the warrant agent or any other office indicated in the applicable prospectus supplement. A holder of a debt warrant will not have any of the rights of a holder of the debt securities which may be purchased by the exercise of the debt warrant before the debt securities are purchased by the exercise of the debt warrant. Accordingly, before a debt warrant is exercised, the holder will not be entitled to receive any payments of principal, premium, if any, or interest, if any, on the debt securities which may be purchased by the exercise of that debt warrant. Exercise of Debt Warrants. Each debt warrant will entitle the holder to purchase for cash the principal amount of debt securities described in the applicable prospectus supplement at the exercise price described or explained in the prospectus supplement. Debt warrants may be exercised at any time from the time they become exercisable, as described in the applicable prospectus supplement, up to the time on the date stated in the applicable prospectus supplement. Afterwards, unexercised debt warrants will become void. Debt warrants may be exercised in the manner described in the applicable prospectus supplement. When Toll Brothers, Inc. receives payment and the properly completed and duly executed debt warrant certificate at the corporate trust office of the warrant agent or any other office indicated in the applicable prospectus supplement, it will, as soon as practicable, forward the debt securities purchased upon the exercise of the debt warrants. If less than all of the debt warrants represented by the debt warrant certificate are exercised, Toll Brothers, Inc. will issue a new debt warrant certificate for the amount of debt warrants that remain exercisable. Common Stock Warrants General. The prospectus supplement relating to any series of common stock warrants that are offered by this prospectus will describe the specific terms of that series of common stock warrants, any related common stock warrant agreement and the common stock warrant certificate(s) representing the common stock warrants. The applicable prospectus supplement will describe, among other things, the following terms, to the extent they are applicable to that series of common stock warrants: o the procedures and conditions relating to the exercise of the common stock warrants; o the number of shares of common stock, if any, issued with the common stock warrants; o the date, if any, on and after which the common stock warrants and any related shares of common stock will be separately transferable; o the offering price, if any, of the common stock warrants; o the number of shares of common stock which may be purchased upon exercise of the common stock warrants and the price or prices at which the shares may be purchased upon exercise; o the date on which the right to exercise the common stock warrants will begin and the date on which the right will expire; o a discussion of the material United States federal income tax considerations applicable to the exercise of the common stock warrants; o call provisions, if any, of the common stock warrants; and o any other material terms of the common stock warrants. 22 Common stock warrant certificates will be exchangeable for new common stock warrant certificates of different denominations. In addition, common stock warrants may be exercised at the corporate trust office of the warrant agent or any other office indicated in the applicable prospectus supplement. A holder of a common stock warrant will not have any of the rights of a holder of the common stock which may be purchased by the exercise of the common stock warrant before the common stock is purchased by the exercise of the common stock warrant. Accordingly, before a common stock warrant is exercised, the holder will not be entitled to receive any dividend payments or exercise any voting or other rights associated with the shares of common stock which may be purchased when the common stock warrant is exercised. Exercise of Common Stock Warrants. Each common stock warrant will entitle the holder to purchase for cash the number of shares of common stock of Toll Brothers, Inc. at the exercise price that is described or explained in the applicable prospectus supplement. Common stock warrants may be exercised at any time from the time they become exercisable, as described in the applicable prospectus supplement, up to the time on the date stated in the applicable prospectus supplement. Afterwards, unexercised common stock warrants will become void. Common stock warrants may be exercised in the manner described in the applicable prospectus supplement. When Toll Brothers, Inc. receives payment and the properly completed and duly executed common stock warrant certificate at the corporate trust office of the warrant agent or any other office indicated in the applicable prospectus supplement, it will, as soon as practicable, forward a certificate representing the number of shares of common stock purchased upon exercise of the common stock warrants. If less than all of the common stock warrants represented by the common stock warrant certificate are exercised, Toll Brothers, Inc. will issue a new common stock warrant certificate for the amount of common stock warrants that remain exercisable. Preferred Stock Warrants General. The prospectus supplement relating to any series of preferred stock warrants that are offered by this prospectus will describe the specific terms of that series of preferred stock warrants, any related preferred stock warrant agreement and the preferred stock warrant certificate(s) representing the preferred stock warrants. The applicable prospectus supplement will describe, among other things, the following terms, to the extent they are applicable to that series of preferred stock warrants: o the designation and terms of the shares of preferred stock which may be purchased upon exercise of the preferred stock warrants and the procedures and conditions relating to the exercise of the preferred stock warrants; o the designation and terms of any related shares of preferred stock with which the preferred stock warrants are issued and the number of shares of the preferred stock, if any, issued with preferred stock warrants; o the date, if any, on and after which the preferred stock warrants and any related shares of preferred stock will be separately transferable; o the offering price, if any, of the preferred stock warrants; o the number of shares of preferred stock which may be purchased upon exercise of the preferred stock warrants and the initial price or prices at which the shares may be purchased upon exercise; o the date on which the right to exercise the preferred stock warrants will begin and the date on which the right will expire; o a discussion of the material United States federal income tax considerations relevant to the exercise of the preferred stock warrants; o call provisions, if any, of the preferred stock warrants; and o any other material terms of the preferred stock warrants. 23 Preferred stock warrant certificates will be exchangeable for new preferred stock warrant certificates of different denominations. In addition, preferred stock warrants may be exercised at the corporate trust office of the warrant agent or any other office indicated in the applicable prospectus supplement. A holder of a preferred stock warrant will not have any of the rights of a holder of the preferred stock which may be purchased by the exercise of the preferred stock warrant before the preferred stock is purchased by the exercise of the preferred stock warrant. Accordingly, before a preferred stock warrant is exercised, the holder will not be entitled to receive any dividend payments or exercise any voting or other rights associated with the preferred stock which may be purchased when the preferred stock warrant is exercised. Exercise of Preferred Stock Warrants. Each preferred stock warrant will entitle the holder to purchase for cash the number of shares of preferred stock of Toll Brothers, Inc. at the exercise price described or explained in the applicable prospectus supplement. Preferred stock warrants may be exercised at any time from the time they become exercisable, as described in the applicable prospectus supplement, up to the time on the date stated in the applicable prospectus supplement. Afterwards, unexercised preferred stock warrants will become void. Preferred stock warrants may be exercised in the manner described in the applicable prospectus supplement. When Toll Brothers, Inc. receives payment and the properly completed and duly executed preferred stock warrant certificate at the corporate trust office of the warrant agent or any other office indicated in the applicable prospectus supplement, it will, as soon as practicable, forward a certificate representing the number of shares of preferred stock purchased upon exercise of the preferred stock warrants. If less than all of the preferred stock warrants represented by the preferred stock warrant certificate are exercised, Toll Brothers, Inc. will issue a new preferred stock warrant certificate for the amount of preferred stock warrants that remain exercisable. CLASSIFIED BOARD OF DIRECTORS AND RESTRICTIONS ON REMOVAL Under the Certificate of Incorporation, as amended, of Toll Brothers, Inc., the board of directors is divided into three classes of directors serving staggered terms of three years each. Each class is to be as nearly equal in number as possible, with one class being elected each year. The Certificate of Incorporation, as amended, also provides that: o directors may be removed from office only for cause and only with the affirmative vote of 66 2/3% of the voting power of the voting stock; o any vacancy on the board of directors or any newly created directorship will be filled by the remaining directors then in office, though less than a quorum; and o advance notice of stockholder nominations for the elections of directors must be given in the manner provided by the By-Laws of Toll Brothers, Inc. The required 66 2/3% stockholder vote necessary to alter, amend or repeal these provisions of the Certificate of Incorporation, as amended, the related amendments to the By-Laws and all other provisions of the By-Laws, or to adopt any provisions relating to the classification of the board of directors and the other matters described above may make it more difficult to change the composition of the board of directors of Toll Brothers, Inc. and may discourage or make difficult any attempt by a person or group to obtain control of Toll Brothers, Inc. PLAN OF DISTRIBUTION Toll Brothers, Inc., Toll Corp., First Huntingdon Finance Corp. and Toll Finance Corp., or any of them, may offer and sell their respective securities to which this prospectus relates in any one or more of the following ways: o directly to purchasers; o to or through underwriters; o to or through dealers; or o to or through agents. 24 Each time we sell securities, we will provide a prospectus supplement that will name any underwriter, dealer or agent involved in the offer and sale of the securities. The prospectus supplement will also set forth the terms of the offering, including the purchase price of the securities and the proceeds to the issuer(s) from the sale of the securities, any underwriting discounts and other items constituting underwriters' compensation, any initial public offering price and any discounts or concessions allowed or reallowed or paid to dealers and any securities exchanges on which the securities may be listed. The securities may be distributed from time to time in one or more transactions: o at a fixed price or prices, which may be changed; o at market prices prevailing at the time of sale; o at prices related to prevailing market prices; or o at negotiated prices. Each time we sell securities, we will describe the method of distribution of the securities in the prospectus supplement relating to the transaction. If underwriters are used in the offer and sale of the securities being offered by this prospectus, the name of each managing underwriter, if any, and any other underwriters and the terms of the transaction, including any underwriting discounts and other items constituting compensation of the underwriters and dealers, if any, will be included in the prospectus supplement relating to the offering. The securities will be acquired by the underwriters for their own accounts and may be resold from time to time in one or more transactions, including negotiated transactions, at a fixed public offering price or at varying prices determined at the time of sale. Any initial public offering price and any discounts or concessions allowed or reallowed or paid to dealers may be changed from time to time. If a dealer is used in the sale of the securities being offered by this prospectus, the issuer(s) of the securities will sell those securities to the dealer, as principal. The dealer may then resell those securities to the public at varying prices to be determined by the dealer at the time of resale. The name of the dealer and the terms of the transaction will be identified in the applicable prospectus supplement. If an agent is used in an offering of securities being offered by this prospectus, the agent will be named and the terms of the agency will be described in the applicable prospectus supplement relating to the offering. Unless otherwise indicated in the prospectus supplement, an agent will act on a best efforts basis for the period of its appointment. Offers to purchase the securities offered by this prospectus may be solicited, and sales of the securities may be made, by the issuer(s) of those securities directly to institutional investors or others, who may be deemed to be underwriters within the meaning of the Securities Act of 1933 with respect to any resales of the securities. The terms of any offer made in this manner will be included in the prospectus supplement relating to the offer. If indicated in the applicable prospectus supplement, the issuer(s) of the securities to which the prospectus supplement relates will authorize underwriters or their other agents to solicit offers by certain institutional investors to purchase securities from the issuer(s) pursuant to contracts providing for payment and delivery at a future date. Institutional investors with which these contracts may be made include commercial and savings banks, insurance companies, pension funds, investment companies, educational and charitable institutions and others. In all cases, these purchasers must be approved by the issuer(s) of the securities. The obligations of any purchaser under any of these contracts will not be subject to any conditions except that (a) the purchase of the securities must not at the time of delivery be prohibited under the laws of any jurisdiction to which that purchaser is subject and (b) if the securities are also being sold to underwriters, the issuer(s) must have sold to these underwriters the securities not subject to delayed delivery. Underwriters and other agents will not have any responsibility in respect of the validity or performance of these contracts. In addition, the securities offered by this prospectus and an accompanying prospectus supplement may be offered and sold by the holders of the securities in one or more of the transactions described above, which transactions may be effected at any time and from time to time. Upon a sale of securities made in this manner, the respective holders of the securities and any participating broker, dealer or underwriter may be deemed to be underwriters within the meaning of Section 2(11) of the Securities Act of 1933, and any commissions, discounts or concessions upon the sale, or any profit on the resale of the securities, received in connection with the sale may be deemed to be underwriting commissions or discounts under the Securities Act of 1933. The compensation, including commissions, discounts, concessions and other profits, received by any broker, dealer or underwriter in connection with the sale of any of the securities, may be less than or in excess of customary commissions. 25 Some of the underwriters, dealers or agents used by Toll Brothers, Inc., Toll Corp., First Huntingdon Finance Corp. and Toll Finance Corp., or any of them, in any offering of securities under this prospectus may be customers of, including borrowers from, engage in transactions with, and perform services for, Toll Brothers, Inc., Toll Corp., First Huntingdon Finance Corp. and Toll Finance Corp., or any of them, and/or one or more of their respective affiliates in the ordinary course of business. Underwriters, dealers, agents and other persons may be entitled, under agreements which may be entered into with Toll Brothers, Inc., Toll Corp., First Huntingdon Finance Corp. or Toll Finance Corp., as the case may be, to indemnification against and contribution toward certain civil liabilities, including liabilities under the Securities Act of 1933 and to be reimbursed by Toll Brothers, Inc. and/or Toll Corp., Toll Finance Corp. or First Huntingdon Finance Corp. for certain expenses. Until the distribution of the securities offered by this prospectus is completed, rules of the SEC may limit the ability of the underwriters and certain selling group members, if any, to bid for and purchase the securities. As an exception to these rules, the representatives of the underwriters, if any, are permitted to engage in certain transactions that stabilize the price of the securities. These transactions may consist of bids or purchases for the purpose of pegging, fixing or maintaining the price of the securities. If underwriters create a short position in the securities in connection with the offering of the securities (i.e., if they sell more securities than are included on the cover page of the applicable prospectus supplement), the representatives of the underwriters may reduce that short position by purchasing securities in the open market. The representatives of the underwriters also may elect to reduce any short position by exercising all or part of the over-allotment option, if any, described in the applicable prospectus supplement. The representatives of the underwriters also may impose a penalty bid on certain underwriters and selling group members. This means that if the representatives purchase securities in the open market to reduce the underwriters' short position or to stabilize the price of the securities, they may reclaim the amount of the selling concession from the underwriters and selling group members who sold those securities as part of the offering of the securities. In general, purchases of a security for the purpose of stabilization or to reduce a syndicate short position could cause the price of the security to be higher than it might otherwise be in the absence of these types of purchases. The imposition of a penalty bid might have an effect on the price of a security to the extent that it were to discourage resales of the security by purchasers in the offering. Neither Toll Brothers, Inc., Toll Corp., First Huntingdon Finance Corp. or Toll Finance Corp. nor any of the underwriters, if any, makes any representation or prediction as to the direction or magnitude of any effect that the transactions described above may have on the price of the securities. In addition, neither Toll Brothers, Inc., Toll Corp., First Huntingdon Finance Corp. or Toll Finance Corp. nor any of the underwriters, if any, makes any representation that the representatives of the underwriters, if any, will engage in these transactions or that these transactions, once commenced, will not be discontinued without notice. The anticipated date of delivery of the securities offered by this prospectus will be described in the applicable prospectus supplement relating to the offering. The securities offered by this prospectus may or may not be listed on a national securities exchange or a foreign securities exchange. We cannot give any assurances that there will be a market for any of the securities offered by this prospectus and any prospectus supplement. We estimate that the total expenses we will incur in offering the securities to which this prospectus relates, excluding underwriting discounts and commissions, if any, will be approximately $1,300,000. LEGAL MATTERS Certain legal matters relating to the validity of the securities offered by this prospectus will be passed upon by Wolf, Block, Schorr and Solis-Cohen LLP, Philadelphia, Pennsylvania. 26 EXPERTS Ernst & Young LLP, independent auditors, have audited our consolidated financial statements and schedule included in our Annual Report on Form 10-K for the fiscal year ended October 31, 2001, as set forth in their report, which is incorporated by reference in this prospectus and elsewhere in the registration statement. Our financial statements and schedule are incorporated by reference in reliance on Ernst & Young LLP's report, given on their authority as experts in accounting and auditing. 27 PART II INFORMATION NOT REQUIRED IN PROSPECTUS Item 14. Other Expenses of Issuance and Distribution. The following table sets forth an estimate of the costs and expenses, other than underwriting discounts and commissions, to be incurred by Toll Brothers, Inc. in connection with the issuance and distribution of the securities being registered. Securities and Exchange Commission registration fee...............$ 69,000 Printing and engraving............................................$ 150,000 Rating agency fees................................................$ 400,000 Blue Sky fees and expenses........................................$ 50,000 Legal fees and expenses...........................................$ 300,000 Accounting fees and expenses......................................$ 150,000 Trustee fees and expenses.........................................$ 40,000 Miscellaneous.....................................................$ 141,000 ============= Total.............................................................$ 1,300,000 All expenses, except the Securities and Exchange Commission registration fee, are estimated. Item 15. Indemnification of Directors and Officers. For information regarding provisions under which a director or officer of Toll Brothers, Inc., Toll Corp., First Huntingdon Finance Corp. or Toll Finance Corp. may be insured or indemnified in any manner against any liability which he may incur in his capacity as such, reference is made to Section 145 of the Delaware General Corporation Law, which provides in its entirety as follows: "(a) A corporation shall have power to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation) by reason of the fact that the person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by the person in connection with such action, suit or proceeding if the person acted in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe the person's conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which the person reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that the person's conduct was unlawful. (b) A corporation shall have power to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that the person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses (including attorneys' fees) actually and reasonably incurred by the person in connection with the defense or settlement of such action or suit if the person acted in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of the corporation and except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation unless and only to the extent that the Court of Chancery or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper. II-1 (c) To the extent that a present or former director or officer of a corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in subsections (a) and (b) of this section, or in defense of any claim, issue or matter therein, such person shall be indemnified against expenses (including attorneys' fees) actually and reasonably incurred by such person in connection therewith. (d) Any indemnification under subsections (a) and (b) of this section (unless ordered by a court) shall be made by the corporation only as authorized in the specific case upon a determination that indemnification of the present or former director, officer, employee or agent is proper in the circumstances because the person has met the applicable standard of conduct set forth in subsections (a) and (b) of this section. Such determination shall be made, with respect to a person who is a director or officer at the time of such determination, (1) by a majority vote of the directors who are not parties to such action, suit or proceeding, even though less than a quorum, or (2) by a committee of such directors designated by majority vote of such directors, even though less than a quorum, or (3) if there are no such directors, or if such directors so direct, by independent legal counsel in a written opinion, or (4) by the stockholders. (e) Expenses (including attorneys' fees) incurred by an officer or director in defending any civil, criminal, administrative or investigative action, suit or proceeding may be paid by the corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such director or officer to repay such amount if it shall ultimately be determined that such person is not entitled to be indemnified by the corporation as authorized in this section. Such expenses (including attorneys' fees) incurred by former directors and officers or other employees and agents may be so paid upon such terms and conditions, if any, as the corporation deems appropriate. (f) The indemnification and advancement of expenses provided by, or granted pursuant to, the other subsections of this section shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under any bylaw, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in such person's official capacity and as to action in another capacity while holding such office. (g) A corporation shall have power to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against such person and incurred by such person in any such capacity, or arising out of such person's status as such, whether or not the corporation would have the power to indemnify such person against such liability under this section. (h) For purposes of this section, references to "the corporation" shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers, and employees or agents, so that any person who is or was a director, officer, employee or agent of such constituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, shall stand in the same position under this section with respect to the resulting or surviving corporation as such person would have with respect to such constituent corporation if its separate existence had continued. (i) For purposes of this section, references to "other enterprises" shall include employee benefit plans; references to "fines" shall include any excise taxes assessed on a person with respect to any employee benefit plan; and references to "serving at the request of the corporation" shall include any service as a director, officer, employee or agent of the corporation which imposes duties on, or involves services by, such director, officer, employee, or agent with respect to an employee benefit plan, its participants or beneficiaries; and a person who acted in good faith and in a manner such person reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner "not opposed to the best interests of the corporation" as referred to in this section. II-2 (j) The indemnification and advancement of expenses provided by, or granted pursuant to, this section shall, unless otherwise provided when authorized or ratified, continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person. (k) The Court of Chancery is hereby vested with exclusive jurisdiction to hear and determine all actions for advancement of expenses or indemnification brought under this section or under any bylaw, agreement, vote of stockholders or disinterested directors, or otherwise. The Court of Chancery may summarily determine a corporation's obligation to advance expenses (including attorneys' fees)." See also Article Six of Toll Brothers, Inc.'s Certificate of Incorporation, as amended, which obligates, and Article VII of Toll Brothers, Inc.'s By-Laws, as amended, which grants, Toll Brothers, Inc. the power to indemnify its directors, officers, employees and agents. In addition, Article VIII of each of the By-Laws, as amended, of Toll Corp., First Huntingdon Finance Corp., and Toll Finance Corp. obligates each of these entities to indemnify its directors, officers, employees and agents. See also the Underwriting Agreement Basic Provisions, filed as Exhibit 1 hereto, pursuant to which the Underwriters agree to indemnify the Registrants and their respective directors, officers and controlling persons against certain liabilities, including liabilities under the Securities Act. See Item 17 of this Part II for further information concerning indemnification of directors, officers and controlling persons of Toll Brothers, Inc., Toll Corp., First Huntingdon Finance Corp. and Toll Finance Corp. Item 16. Exhibits 1. Form of Underwriting Agreement Basic Provisions.* 4.1 Form of Indenture among Toll Corp., as issuer, Toll Brothers, Inc., as guarantor, and Bank One Trust Company, NA, as Trustee. 4.2 Form of Indenture among First Huntingdon Finance Corp., as issuer, Toll Brothers, Inc., as guarantor, and Bank One Trust Company, NA, as Trustee. 4.3 Form of Indenture among Toll Finance Corp., as issuer, Toll Brothers, Inc., as guarantor, and Bank One Trust Company, NA, as Trustee. 5 Opinion and Consent of Wolf, Block, Schorr and Solis-Cohen LLP.** 12 Statement re Computation of Ratios of Earnings to Fixed Charges. 23.1 Consent of Wolf, Block, Schorr and Solis-Cohen LLP (included as part of Exhibit 5). 23.2 Consent of Ernst & Young LLP. 24 Powers of Attorney (included on the signature pages of this Registration Statement). 25.1 Form T-1, Statement of Eligibility and Qualification under the Trust Indenture Act of 1939 with respect to the debt securities of Toll Corp. and guarantees of Toll Brothers, Inc. 25.2 Form T-1, Statement of Eligibility and Qualification under the Trust Indenture Act of 1939 with respect to the debt securities of First Huntingdon Finance Corp. and guarantees of Toll Brothers, Inc. 25.3 Form T-1 Statement of Eligibility and Qualification under the Trust Indenture Act of 1939 with respect to the debt securities of Toll Finance Corp. and guarantees of Toll Brothers, Inc. II-3 - --------------- * This exhibit will be filed by pre-effective amendment. ** This exhibit, as signed, will be filed by pre-effective amendment. Additional exhibits to this registration statement will be filed with or incorporated by reference in this registration statement in connection with future amendments to, or supplements to, the prospectus forming a part of this registration statement. Item 17. Undertakings. (a) The undersigned registrants hereby undertake: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: (i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in the volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20 percent change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement; (iii) to include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the information required to be included a post-effective amendment by those paragraphs is contained in periodic reports filed with or furnished to the Commission by the registrants pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in this registration statement. (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (b) The undersigned registrants hereby undertake that, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrants' annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 that is incorporated by reference in this registration statement shall be deemed to be a new registration statement relating to the securities offered herein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (c) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrants pursuant to the foregoing provisions, or otherwise, the registrants have been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrants of expenses incurred or paid by a director, officer or controlling person of the registrants in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the Securities being registered, the registrants will, unless in the opinion of their counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. II-4 (d) The undersigned registrants hereby undertake that: (1) For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part or this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrants pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective. (2) For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. II-5 SIGNATURES AND POWER OF ATTORNEY Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the Township of Lower Moreland, Commonwealth of Pennsylvania, on March 27, 2002. TOLL BROTHERS, INC. By: /s/ Robert I. Toll ---------------------------------------- Robert I. Toll, Chairman of the Board of Directors KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below hereby constitutes and appoints Robert I. Toll, Zvi Barzilay, Richard J. Braemer, Joel H. Rassman and Joseph R. Sicree, and each of them, jointly and severally, his or her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any and all amendments to this registration statement, and to file the same with all exhibits thereto, and other documents in connection therewith (including, without limitation, any related registration statement or amendment thereto filed in accordance with Rule 462 under the Securities Act of 1933, as amended), with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents or any of them full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities indicated on March 27, 2002.
Signature Title - --------- ----- /s/ Robert I. Toll Chairman of the Board, Chief Executive Officer and - ------------------------------- Director (Principal Executive Officer) Robert I. Toll /s/ Bruce E. Toll Vice Chairman of the Board and Director - ------------------------------ Bruce E. Toll /s/ Zvi Barzilay President, Chief Operating Officer and Director - ------------------------------ Zvi Barzilay /s/ Robert S. Blank Director - ------------------------------ Robert S. Blank /s/ Edward G. Boehne Director - ------------------------------ Edward G. Boehne /s/ Richard J. Braemer Director - ------------------------------ Richard J. Braemer /s/ Roger S. Hillas Director - ------------------------------ Roger S. Hillas
II-6
/s/ Carl B. Marbach Director - ------------------------------ Carl B. Marbach /s/ Joel H. Rassman Senior Vice President, Treasurer, Chief Financial - ------------------------------ Officer and Director (Principal Financial Officer) Joel H. Rassman /s/ Paul E. Shapiro Director - ------------------------------ Paul E. Shapiro /s/ Joseph R. Sicree Vice President and Chief Accounting Officer - ------------------------------ (Principal Accounting Officer) Joseph R. Sicree
SIGNATURES AND POWER OF ATTORNEY Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this amendment to be signed on its behalf by the undersigned, thereunto duly authorized, in the Township of Lower Moreland, Commonwealth of Pennsylvania, on March 27, 2002. TOLL CORP. By: /s/ Robert I. Toll ---------------------------------------- Robert I. Toll, Chairman of the Board of Directors KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below hereby constitutes and appoints Robert I. Toll, Zvi Barzilay, Richard J. Braemer, Joel H. Rassman and Joseph R. Sicree, and each of them, jointly and severally, his or her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any and all amendments to this registration statement, and to file the same with all exhibits thereto, and other documents in connection therewith (including, without limitation, any related registration statement or amendment thereto filed in accordance with Rule 462 under the Securities Act of 1933, as amended), with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents or any of them full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities indicated on March 27, 2002.
Signature Title - --------- ----- /s/ Robert I. Toll Chairman of the Board, Chief Executive Officer and - ------------------------------- Director (Principal Executive Officer) Robert I. Toll /s/ Zvi Barzilay President, Chief Operating Officer, Secretary and - ------------------------------------- Director Zvi Barzilay /s/ Joel H. Rassman Senior Vice President, Treasurer, Chief Financial - ------------------------------------ Officer and Director (Principal Financial Officer) Joel H. Rassman /s/ Joseph R. Sicree Chief Accounting Officer - -------------------------------------- (Principal Accounting Officer) Joseph R. Sicree
II-7 SIGNATURES AND POWER OF ATTORNEY Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the Township of Lower Moreland, Commonwealth of Pennsylvania, on March 27, 2002. FIRST HUNTINGDON FINANCE CORP. By: /s/ Robert I. Toll -------------------------------------- Robert I. Toll, Chairman of the Board of Directors KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below hereby constitutes and appoints Robert I. Toll, Zvi Barzilay, Richard J. Braemer, Joel H. Rassman and Joseph R. Sicree, and each of them, jointly and severally, his or her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any and all amendments to this registration statement, and to file the same with all exhibits thereto, and other documents in connection therewith (including, without limitation, any related registration statement or amendment thereto filed in accordance with Rule 462 under the Securities Act of 1933, as amended), with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents or any of them full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities indicated on March 27, 2002.
Signature Title - --------- ----- /s/ Robert I. Toll Chairman of the Board, Chief Executive Officer and - ------------------------------- Director (Principal Executive Officer) Robert I. Toll /s/ Zvi Barzilay President, Chief Operating Officer, Secretary and - ------------------------------- Director Zvi Barzilay /s/ Joel H. Rassman Senior Vice President, Treasurer, Chief Financial - ------------------------------- Officer and Director (Principal Financial Officer) Joel H. Rassman /s/ Joseph R. Sicree Chief Accounting Officer - ------------------------------- (Principal Accounting Officer) Joseph R. Sicree
II-8 SIGNATURES AND POWER OF ATTORNEY Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the Township of Lower Moreland, Commonwealth of Pennsylvania, on March 27, 2002. TOLL FINANCE CORP. By: /s/ Robert I. Toll ----------------------------------- Robert I. Toll, Chairman of the Board of Directors KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below hereby constitutes and appoints Robert I. Toll, Zvi Barzilay, Richard J. Braemer, Joel H. Rassman and Joseph R. Sicree, and each of them, jointly and severally, his or her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any and all amendments to this registration statement, and to file the same with all exhibits thereto, and other documents in connection therewith (including, without limitation, any related registration statement or amendment thereto filed in accordance with Rule 462 under the Securities Act of 1933, as amended), with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents or any of them full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities indicated on March 27, 2002.
Signature Title - --------- ------ /s/ Robert I. Toll Chairman of the Board, Chief Executive Officer and - ------------------------------- Director (Principal Executive Officer) Robert I. Toll /s/ Zvi Barzilay President, Chief Operating Officer, Secretary and - ------------------------------- Director Zvi Barzilay /s/ Joel H. Rassman Senior Vice President, Treasurer, Chief Financial - ------------------------------- Officer and Director (Principal Financial Officer) Joel H. Rasman /s/ Joseph R. Sicree Chief Accounting Officer - ------------------------------- (Principal Accounting Officer) Joseph R. Sicree
II-9 Index to Exhibits Exhibit Number Description - -------- ----------- 1. Form of Underwriting Agreement Basic Provisions.* 4.1 Form of Indenture among Toll Corp., as issuer, Toll Brothers, Inc., as guarantor, and Bank One Trust Company, NA, as Trustee. 4.2 Form of Indenture among First Huntingdon Finance Corp., as issuer, Toll Brothers, Inc., as guarantor, and Bank One Trust Company, NA, as Trustee. 4.3 Form of Indenture among Toll Finance Corp., as issuer, Toll Brothers, Inc., as guarantor, and Bank One Trust Company, NA, as Trustee. 5 Opinion and Consent of Wolf, Block, Schorr and Solis-Cohen LLP.** 12 Statement re Computation of Ratios of Earnings to Fixed Charges. 23.1 Consent of Wolf, Block, Schorr and Solis-Cohen LLP (included as part of Exhibit 5). 23.2 Consent of Ernst & Young LLP. 24 Powers of Attorney (included on the signature pages of this Registration Statement). 25.1 Form T-1, Statement of Eligibility and Qualification under the Trust Indenture Act of 1939 with respect to the debt securities of Toll Corp. and guarantees of Toll Brothers, Inc. 25.2 Form T-1, Statement of Eligibility and Qualification under the Trust Indenture Act of 1939 with respect to the debt securities of First Huntingdon Finance Corp. and guarantees of Toll Brothers, Inc. 25.3 Form T-1 Statement of Eligibility and Qualification under the Trust Indenture Act of 1939 with respect to the debt securities of Toll Finance Corp. and guarantees of Toll Brothers, Inc. - --------------- * This exhibit will be filed by pre-effective amendment. ** This exhibit, as signed, will be filed by pre-effective amendment. EX-4.1 3 b317330_ex4-1.txt EXHIBIT 4.1 EXHIBIT 4.1 TOLL CORP., as Issuer TOLL BROTHERS, INC., as Guarantor Debt Securities Indenture Dated as of ___________________ BANK ONE TRUST COMPANY, NA, as Trustee CROSS-REFERENCE TABLE TIA Indenture Section Section - ------- ------- 310(a)(1).................................................. 9.10 (a)(2)..................................................... 9.10 (a)(3)..................................................... N.A. (a)(4)..................................................... N.A. (b)........................................................ 9.08; 9.10; 13.02 (c)........................................................ N.A. 311(a)..................................................... 9.11 (b)........................................................ 9.11 (c)........................................................ N.A. 312(a)..................................................... 2.07 (b)........................................................ 13.03 (c)........................................................ 13.03 313(a)..................................................... 9.06 (b)(1)..................................................... N.A. (b)(2)..................................................... 9.06 (c)........................................................ 9.06; 13.02 (d)........................................................ 9.06 314(a)..................................................... 4.03; 13.02 (b)........................................................ N.A. (c)(1)..................................................... 13.04 (c)(2)..................................................... 13.04 (c)(3)..................................................... N.A. (d)........................................................ N.A. (e)........................................................ 13.05 (f)........................................................ N.A. 315(a)..................................................... 9.01(b) (b)........................................................ 9.05; 13.02 (c)........................................................ 9.01(a) (d)........................................................ 9.01(c) (e)........................................................ 8.11 316(a)(last sentence)...................................... 13.06 (a)(1)(A).................................................. 8.05 (a)(1)(B).................................................. 8.04 (a)(2)..................................................... N.A. (b)........................................................ 8.07 317(a)(1).................................................. 8.08 (a)(2)..................................................... 8.09 (b)........................................................ 2.06 318(a)..................................................... 13.01 N.A. means Not Applicable. Note: This cross-reference table shall not, for any purpose, be deemed to be a part of the Indenture. TABLE OF CONTENTS
Page ---- ARTICLE 1. DEFINITIONS AND INCORPORATION BY REFERENCE Section 1.01 Definitions............................................................................1 Section 1.02 Incorporation by Reference of Trust Indenture Act......................................5 Section 1.03 Incorporation by Reference of Provisions of Securities.................................6 Section 1.04 Rules of Construction..................................................................6 ARTICLE 2. THE SECURITIES Section 2.01 Forms Generally........................................................................6 Section 2.02 Form of Trustee's Certificate of Authentication........................................6 Section 2.03 Amount Unlimited, Issuable in Series...................................................7 Section 2.04 Execution and Authentication...........................................................8 Section 2.05 Registrar and Paying Agent.............................................................9 Section 2.06 Paying Agent To Hold Money in Trust....................................................9 Section 2.07 Securityholder Lists..................................................................10 Section 2.08 Transfer and Exchange.................................................................10 Section 2.09 Replacement Securities................................................................10 Section 2.10 Outstanding Securities................................................................10 Section 2.11 Temporary Securities..................................................................11 Section 2.12 Cancellation..........................................................................11 Section 2.13 Defaulted Interest....................................................................11 Section 2.14 Global Securities.....................................................................12 ARTICLE 3. REDEMPTION Section 3.01 Notices to Trustee....................................................................12 Section 3.02 Selection of Securities To Be Redeemed................................................13 Section 3.03 Notice of Redemption..................................................................13 Section 3.04 Effect of Notice of Redemption........................................................13 Section 3.05 Deposit of Redemption Price...........................................................14 Section 3.06 Securities Redeemed in Part...........................................................14
-i- ARTICLE 4. COVENANTS Section 4.01 Payment of Securities.................................................................14 Section 4.02 SEC Reports...........................................................................14 Section 4.03 Compliance Certificate................................................................14 ARTICLE 5. SUCCESSOR CORPORATION Section 5.01 When the Company and the Guarantor May Merge, etc.....................................15 ARTICLE 6. SUBORDINATION Section 6.01 Agreement To Subordinate..............................................................15 Section 6.02 Company Not To Make Payments with Respect to Securities in Certain Circumstances...................................................15 Section 6.03 Securities Subordinated to Prior Payment of All Senior Indebtedness of the Company on Dissolution, Liquidation or Reorganization of the Company..........................................16 Section 6.04 Securityholders To Be Subrogated to Rights of Holders of Senior Indebtedness of the Company.................................................17 Section 6.05 Obligation of the Company Unconditional...............................................17 Section 6.06 Knowledge of Trustee..................................................................18 Section 6.07 Application by Trustee of Monies Deposited With It....................................18 Section 6.08 Subordination Rights Not Impaired by Acts or Omissions of Company or Holders of Senior Indebtedness of the Company...........................................................18 Section 6.09 Securityholders Authorize Trustee To Effectuate Subordination of Securities...........................................................19 Section 6.10 Right of Trustee To Hold Senior Indebtedness of the Company ..............................................................................19 Section 6.11 Article Six Not To Prevent Events of Default..........................................19 ARTICLE 7. GUARANTEE Section 7.01 Guarantee.............................................................................19 Section 7.02 Agreement To Subordinate..............................................................20 Section 7.03 Guarantor Not To Make Payments with Respect to Securities in Certain Circumstances...................................................21 Section 7.04 Guarantee Subordinated to Prior Payment of All Senior Indebtedness of the Guarantor on Dissolution, Liquidation or Reorganization of the Guarantor........................................22
-ii- Section 7.05 Securityholders To Be Subrogated to Rights of Holders of Senior Indebtedness of the Guarantor...............................................23 Section 7.06 Obligation of the Guarantor Unconditional.............................................23 Section 7.07 Knowledge of Trustee..................................................................24 Section 7.08 Application by Trustee of Monies Deposited With It....................................24 Section 7.09 Subordination Rights Not Impaired by Acts or Omissions of Guarantor or Holders of Senior Indebtedness of the Guarantor.........................................................24 Section 7.10 Securityholders Authorize Trustee To Effectuate Subordination of Guarantee............................................................24 Section 7.11 Right of Trustee To Hold Senior Indebtedness of the Guarantor.............................................................................25 Section 7.12 Article 7 Not To Prevent Events of Default............................................25 Section 7.13 Execution and Delivery of Guarantee...................................................25 Section 7.14 Subordination of Indebtedness Owed by the Company to the Guarantor.........................................................................25 Section 7.15 Officers' Certificate.................................................................25 ARTICLE 8. DEFAULTS AND REMEDIES Section 8.01 Events of Default.....................................................................26 Section 8.02 Acceleration..........................................................................27 Section 8.03 Other Remedies........................................................................28 Section 8.04 Waiver of Past Defaults...............................................................28 Section 8.05 Control by Majority...................................................................28 Section 8.06 Limitation on Suits...................................................................28 Section 8.07 Rights of Holders To Receive Payment..................................................29 Section 8.08 Collection Suit by Trustee............................................................29 Section 8.09 Trustee May File Proofs of Claim......................................................29 Section 8.10 Priorities............................................................................29 Section 8.11 Undertaking for Costs.................................................................30 ARTICLE 9. TRUSTEE Section 9.01 Duties of Trustee.....................................................................30 Section 9.02 Rights of Trustee.....................................................................31 Section 9.03 Individual Rights of Trustee..........................................................31 Section 9.04 Trustee Disclaimer....................................................................31 Section 9.05 Notice of Defaults....................................................................31 Section 9.06 Reports by Trustee to Holders.........................................................31 Section 9.07 Compensation and Indemnity............................................................32 Section 9.08 Replacement of Trustee................................................................32 Section 9.09 Successor Trustee by Merger, etc......................................................33 Section 9.10 Eligibility; Disqualification.........................................................33 Section 9.11 Preferential Collection of Claims Against Company.....................................33
-iii- ARTICLE 10. CONVERSION OF SECURITIES Section 10.01 Applicability of Article..............................................................33 Section 10.02 Conversion Privilege..................................................................34 Section 10.03 Manner of Exercise of Conversion Privilege............................................34 Section 10.04 Payment in Lieu of Fractional Shares..................................................35 Section 10.05 Adjustment of Conversion Price........................................................35 Section 10.06 Notice of Certain Corporate Action....................................................37 Section 10.07 Guarantor To Provide Stock............................................................38 Section 10.08 Taxes on Conversions..................................................................38 Section 10.09 Covenant as to Stock..................................................................39 Section 10.10 Consolidation or Merger...............................................................39 Section 10.11 Disclaimer of Responsibility for Certain Matters......................................39 ARTICLE 11. DISCHARGE OF INDENTURE Section 11.01 Termination of the Company's and the Guarantor's Obligations...........................................................................40 Section 11.02 Application of Trust Money............................................................41 Section 11.03 Repayment to Company..................................................................41 ARTICLE 12. AMENDMENTS, SUPPLEMENTS AND WAIVERS Section 12.01 Without Consent of Holders............................................................41 Section 12.02 With Consent of Holders...............................................................41 Section 12.03 Compliance with Trust Indenture Act...................................................42 Section 12.04 Revocation and Effect of Consents.....................................................42 Section 12.05 Notation on or Exchange of Securities.................................................42 Section 12.06 Trustee To Sign Amendments, etc.......................................................43 ARTICLE 13. MISCELLANEOUS Section 13.01 Trust Indenture Act Controls..........................................................43 Section 13.02 Notices...............................................................................43 Section 13.03 Communication by Holders with Other Holders...........................................44 Section 13.04 Certificate and Opinion as to Conditions Precedent....................................44 Section 13.05 Statements Required in Certificate or Opinion.........................................44 Section 13.06 When Treasury Securities Disregarded..................................................44 Section 13.07 Rules by Trustee, Paying Agent, Registrar.............................................45 Section 13.08 Legal Holidays........................................................................45
-iv- Section 13.09 Governing Law.........................................................................45 Section 13.10 No Adverse Interpretation of Other Agreements.........................................45 Section 13.11 No Recourse Against Others............................................................45 Section 13.12 Successors............................................................................45 Section 13.13 Duplicate Originals...................................................................45 Section 13.14 Counterparts..........................................................................45 SIGNATURES..............................................................................................S-1
-v- INDENTURE dated as of ____________________ among TOLL CORP., a Delaware corporation (the "Company"), TOLL BROTHERS, INC., a Delaware corporation (the "Guarantor"), and BANK ONE TRUST COMPANY, NA, a national banking association (the "Trustee"). The Company has duly authorized the execution and delivery of this Indenture to provide for the issuance from time to time of its bonds, debentures, notes and/or other evidences of indebtedness (herein called the "Securities"), which may be senior secured, senior unsecured, senior subordinated or subordinated, to be issued in one or more series as in this Indenture provided. The Guarantor has duly authorized the execution and delivery of this Indenture to provide for the issuance from time to time of its unconditional guarantee of the Securities (herein called the "Guarantee"), which may be senior secured, senior unsecured, senior subordinated or subordinated, as in this Indenture provided. For and in consideration of the premises and the purchase of the Securities by the Holders thereof, it is mutually covenanted and agreed, for the equal and ratable benefit of the Holders of the Securities or of each series thereof as follows: ARTICLE 1. DEFINITIONS AND INCORPORATION BY REFERENCE Section 1.01 Definitions. "Acceleration Notice" has the meaning provided in Section 8.02. "Affiliate" has the meaning provided in Rule 405 promulgated under the Securities Act of 1933, as amended and in effect on the date hereof. "Authorizing Resolution" means a resolution adopted by the Board of Directors or by an Officer or committee of Officers pursuant to Board delegation authorizing a Series of Securities. An Authorizing Resolution shall be so adopted by both the Company and the Guarantor. "Bankruptcy Law" has the meaning provided in Section 8.01. "Board of Directors" means the Board of Directors of the Company or the Guarantor, as the case may be, or any authorized committee of the Board. "Board Resolution" means a copy of a resolution certified by the Secretary or an Assistant Secretary of the Company or the Guarantor, as the case may be, to have been duly adopted by the Board of Directors and to be in full force and effect on the date of such certification and delivered to the Trustee. "Business Day" means a day that is not a Legal Holiday. "Capital Stock" means the classes of capital stock of a Person as they exist on the date of this Indenture or as they may be constituted from time to time and warrants, options and similar rights to acquire such capital stock. "Common Stock" means the Common Stock ($.01 par value) of the Guarantor as the same exists at the date of this Indenture as originally executed or as such stock may be constituted from time to time. "Company" means the party named as such in this Indenture until a successor replaces it and thereafter means the successor or any other obligor on the Securities. "Company" shall also mean the Guarantor in the event the Company fails to perform those duties required by Sections 312 through 317 of the TIA. "Consolidated Net Worth" of any Person means the consolidated stockholders' equity of such Person, as determined in accordance with generally accepted accounting principles. "Conversion Price" means the initial conversion price of Securities of a Series specified in the Authorizing Resolution establishing the terms of such Series Security, as adjusted in accordance with the provisions of Article 10. "Current Market Price" for any relevant date means, (a) except for purposes of Section 10.04, the average of the last reported sale prices of the Common Stock for the 30 consecutive Business Days commencing 45 Business Days before the day in question and (b) for purposes of Section 10.04 only, the last reported sale price of the Common Stock, in either such case as reported on the composite tape, or similar reporting system, for issues listed on the New York Stock Exchange (or if the Common Stock is not then listed on that exchange, for issues listed on such other national securities exchange upon which the Common Stock is listed as may be designated by the Board of Directors for the purposes hereof) or, if there is no such reported sale on the day or days in question, on the basis of the average of the closing bid and asked quotations as so reported, or, if the Common Stock is not listed on any national securities exchange, on the basis of the average of the high bid and low asked quotations on the day or days in question in the over-the-counter market as reported by the National Association of Securities Dealers' Automated Quotations System, or if not so quoted, as reported by National Quotation Bureau, Incorporated, or any similar organization, or if not so reported as determined in good faith by the Board. "Default" means any event which is, or after notice or passage of time or both would be, an Event of Default. "Designated Senior Debt of the Company" means any single issue of indebtedness of the Company constituting Senior Indebtedness of the Company which at the time of determination has an aggregate principal amount outstanding of at least $25,000,000 and is specifically designated in the instrument or instruments creating, governing or evidencing such Senior Indebtedness of the Company as "Designated Senior Debt of Toll Corp." (it being understood that the Company's guarantee of the Revolving Credit Agreement shall be considered a single issue of indebtedness of the Company for purposes of this definition). 2 "Designated Senior Debt of the Guarantor" means any single issue of indebtedness of the Guarantor constituting Senior Indebtedness of the Guarantor which at the time of determination has an aggregate principal amount outstanding of at least $25,000,000 and is specifically designated in the instrument or instruments creating, governing or evidencing such Senior Indebtedness of the Guarantor as "Designated Senior Debt of Toll Brothers, Inc." (it being understood that the Guarantor's guarantee of the Revolving Credit Agreement shall be considered a single issue of indebtedness of the Guarantor for purposes of this definition). "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Event of Default" has the meaning provided in Section 8.01. "Guarantee" has the meaning provided in Section 7.01. "Guarantor" means the party named as such in this Indenture until a successor replaces it and thereafter means the successor. "Holder" or "Securityholder" means the Person in whose name a Security is registered on the Registrar's books. "Indenture" means this Indenture as amended or supplemented from time to time. "Interest Payment Date," when used with respect to any installment of interest payable on the Securities, has the meaning provided in Section 1 of the Securities. "Legal Holiday" has the meaning provided in Section 13.08. "Non-Recourse Indebtedness" means indebtedness or other obligations secured by a lien on property to the extent that the liability for such indebtedness or other obligations is limited to the security of the property without liability on the part of the Guarantor or any Subsidiary (other than the Subsidiary which holds title to such property) for any deficiency. "Non-Recourse Judgment" means a judgment in respect of indebtedness or other obligations secured by a lien on property to the extent that the liability for (i) such indebtedness or other obligations and (ii) such judgment is limited to such property without liability on the part of the Guarantor or any Subsidiary (other than the Subsidiary which holds title to such property) for any deficiency. "Officer" means the Chairman of the Board, the President, any Vice President, the Chief Accounting Officer, the Controller, the Treasurer or the Secretary of the Company or the Guarantor, as the case may be. "Officers' Certificate" means a certificate signed by the Chairman of the Board, the President or any Vice President, and by the Chief Accounting Officer, the Controller, the Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary of the Company or the Guarantor, as the case may be. See Sections 13.04 and 13.05. 3 "Opinion of Counsel" means a written opinion from legal counsel who is acceptable to the Trustee. The counsel may be counsel to, but not an employee of, the Company or the Guarantor. See Sections 13.04 and 13.05. "Original Issue Discount Security" means any Security which provides that an amount less than its principal amount is due and payable upon acceleration after an Event of Default. "Paying Agent" has the meaning provided in Section 2.05. "Person" means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization or government or other agency or political subdivision thereof. "Principal" of a debt security means the principal of the security plus the premium, if any, on the security. "Record Date" for the interest payable on any Interest Payment Date on the Securities has the meaning provided in Section 1 of the Securities. "Registrar" has the meaning provided in Section 2.05. "Restricted Subsidiary," if applicable, has the meaning provided in the Authorizing Resolution. "Revolving Credit Agreement" means the Amended and Restated Credit Agreement dated as of May 18, 2001 among First Huntingdon Finance Corp., Toll Brothers, Inc., certain lenders and Bank One, NA, as Administrative Agent, together with all other agreements, instruments and documents executed or delivered pursuant thereto or in connection therewith (including, without limitation, any guarantee agreements and security documents), in each case as such ageements, instruments or documents may be amended (including any amendment and restatement thereof), supplemented, extended, renewed, refinanced, replaced, increased, restructured or otherwise modified from time to time (including (i) through execution of a new facility with one or more different lenders or (ii) through increasing the amount of available borrowings thereunder. "SEC" means the Securities and Exchange Commission. "Securities" means the securities as amended or supplemented from time to time that are authenticated and issued under this Indenture. "Senior Indebtedness of the Company," if applicable, has the meaning provided in the Authorizing Resolution. "Senior Indebtedness of the Guarantor," if applicable, has the meaning provided in the Authorizing Resolution. "Series" means a series of Securities or the Securities of a Series. "Special Record Date" has the meaning provided in Section 2.13. 4 "Subsidiary" means any corporation of which at least a majority in interest of the outstanding stock having by the terms thereof voting power under ordinary circumstances to elect a majority of the directors of such corporation, irrespective of whether or not at the time stock of any other class or classes of such corporation shall have or might have voting power by reason of the happening of any contingency, is at the time, directly or indirectly, owned or controlled by the Guarantor. "Term Loan Agreement" means the Term Loan Agreement dated as of July 25, 2000, as amended, between First Huntingdon Finance Corp., Toll Brothers, Inc., certain lenders and Bank One, NA, as Administrative Agent, together with all other agreements, instruments and documents executed or delivered pursuant thereto or in connection therewith (including, without limitation, any guarantee agreements and security documents), in each case as such ageements, instruments or documents may be amended (including any amendment and restatement thereof), supplemented, extended, renewed, refinanced, replaced, increased, restructured or otherwise modified from time to time (including (i) through execution of a new facility with one or more different lenders or (ii) through increasing the amount of available borrowings thereunder. "TIA" means the Trust Indenture Act of 1939 (15 U.S. Code Sections 77aaa-77bbbb) as in effect on the date of this Indenture and as it may be amended from time to time. "Trustee" means the party named as such in this Indenture until a successor replaces it and thereafter means the successor. "Trust Officer" when used with respect to the Trustee means any officer within the Corporate Trust Department (or any successor group) of the Trustee, including any Vice President, Assistant Vice President, Trust Officer or any other officer of the Trustee customarily performing functions similar to those performed by the persons who at the time shall be such officers and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of such officer's knowledge of and familiarity with the particular subject. Section 1.02 Incorporation by Reference of Trust Indenture Act. Whenever this Indenture refers to a provision of the TIA, the provision is incorporated by reference in and made a part of this Indenture. The following TIA terms used in this Indenture have the following meanings: "commission" means the SEC. "indenture securities" means the Securities. "indenture security holder" means a Securityholder or Holder. "indenture to be qualified" means this Indenture. "indenture trustee" or "institutional trustee" means the Trustee. "obligor on the indenture securities" means the Company, the Guarantor or any other obligor on the indenture securities. All other TIA terms used in this Indenture that are defined by the TIA, defined by TIA reference to another statute or defined by SEC rule have the meanings assigned to them. - ------------------- * If applicable. 5 Section 1.03 Incorporation by Reference of Provisions of Securities. Whenever this Indenture refers to a provision of the Securities, the provision is incorporated by reference in and made a part of this Indenture. Section 1.04 Rules of Construction. Unless the context otherwise requires: (1) a term has the meaning assigned to it; (2) an accounting term not otherwise defined has the meaning assigned to it in accordance with generally accepted accounting principles at the time of the relevant computation; (3) "or" is not exclusive; (4) words in the singular include the plural, and in the plural include the singular; and (5) provisions apply to successive events and transactions. ARTICLE 2. THE SECURITIES Section 2.01 Forms Generally. The Securities and the Guarantee, respectively, of each series shall be in such forms (including global form) as shall be established by or pursuant to an Authorizing Resolution or in one or more supplemental indentures hereto, in each case with such appropriate provisions as are required or permitted by this Indenture, and may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon as may be required to comply with the rules of any securities exchange or depositary therefor or as may, consistent herewith, be determined appropriate by the Officers executing such Securities, as evidenced by their execution thereof. If the form of any series of Securities is established by action taken pursuant to an Authorizing Resolution, a copy of an appropriate record of such action shall be certified by the Secretary or any Assistant Secretary of the Company and delivered to the Trustee at or prior to the delivery of a written order of the Company signed by two Officers or an Officer and an Assistant Treasurer of the Company for the authentication and delivery of such Securities. The definitive Securities shall be printed, lithographed or engraved on steel engraved borders or may be produced in any other manner, provided that such method is permitted by the rules of any securities exchange on which such Securities may be listed, all as determined by the Officers executing such Securities, as evidenced by their execution of such Securities. The terms and provisions in the Securities shall constitute, and are hereby expressly made, a part of this Indenture. Section 2.02 Form of Trustee's Certificate of Authentication. The Trustee's certificate of authentication shall be in substantially the following form: 6 This is one of the Securities of the series designated herein referred to in the within mentioned Indenture. BANK ONE TRUST COMPANY, NA As Trustee By:_________________________________ Authorized Signatory Section 2.03 Amount Unlimited, Issuable in Series. The aggregate principal amount of Securities that may be issued under this Indenture is unlimited. The Securities may be issued from time to time in one or more Series. Each Series shall be created by an Authorizing Resolution or a supplemental indenture that establishes the terms of the Series, which may include the following: (1) the title of the Series; (2) any limit upon the aggregate principal amount of the Series which may be authenticated and delivered under this Indenture (except for Securities authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of other Securities which, pursuant to Sections 2.08, 2.09, 2.11 or 10.05 and except for any Securities which, pursuant to Section 2.04, are deemed never to have been authenticated and delivered hereunder); (3) the interest rate or method of calculation of the interest rate; (4) the date from which interest will accrue; (5) the Record Dates for interest payable on Securities of the Series; (6) the dates when, places where and manner in which principal and interest are payable; (7) the Registrar and Paying Agent; (8) the terms of any mandatory or optional redemption by the Company; (9) the terms of any redemption at the option of Holders; (10) the denominations in which Securities are issuable; (11) whether Securities will be issued in registered or bearer form and the terms of any such forms of Securities; (12) whether any Securities will be represented by a global Security and the terms of any such global Security; 7 (13) the currencies (including any composite currency) in which principal or interest or both may be paid; (14) if payments of principal or interest may be made in a currency other than that in which Securities are denominated, the manner for determining such payments; (15) provisions for electronic issuance of Securities or issuance of Securities in uncertificated form; (16) any Events of Default or covenants in addition to or in lieu of those set forth in this Indenture; (17) whether and upon what terms Securities may be defeased; (18) the respective forms of the Securities and the Guarantees; (19) whether the Securities of such Series will be convertible into Common Stock of the Guarantor and the terms thereof (including without limitation the Conversion Price, the conversion period and any other provision in addition to or in lieu of those set forth in this Indenture); (20) whether the Securities and Guarantees of such Series shall be subordinated to any obligations of the Company or the Guarantor, and the obligations to which such subordination will apply; (21) whether the Securities of such Series and/or the Guarantees of such Series will be secured and, if applicable, any provisions for securing all or any portion of the indebtedness evidenced by the Securities of such Series and/or the Guarantees of such Series; (22) any terms that may be required by or advisable under applicable law; and (23) any other terms not inconsistent with this Indenture. All Securities of one Series need not be issued at the same time and, unless otherwise provided, a Series may be reopened for issuances of additional Securities of such Series pursuant to an Authorizing Resolution, an Officers' Certificate or in any indenture supplemental hereto. The creation and issuance of a Series and the authentication and delivery thereof are not subject to any conditions precedent. Section 2.04 Execution and Authentication. Two Officers shall sign the Securities for the Company by manual or facsimile signature. The Company's seal shall be reproduced on the Securities. Two Officers of the Guarantor shall sign the notation of the Guarantee by manual or facsimile signature. 8 If an Officer whose signature is on a Security no longer holds that office at the time the Trustee authenticates the Security, the Security shall be valid nevertheless. A Security shall not be valid until the Trustee manually signs the certificate of authentication on the Security. The signature shall be conclusive evidence that the Security has been authenticated under this Indenture. The Trustee shall authenticate Securities for original issue upon a written order of the Company signed by two Officers or by an Officer and an Assistant Treasurer of the Company. Each Security shall be dated the date of its authentication. In authenticating Securities, and accepting the additional responsibilities under this Indenture in relation to such Securities, the Trustee shall be entitled to receive, and (subject to the TIA) shall be fully protected in relying upon, an Opinion of Counsel stating that all conditions precedent to the authentication and delivery of the Securities have been complied with and that the Securities have been duly executed and, when the Securities have been duly authenticated and delivered by the Trustee, will be duly issued and delivered and will constitute valid and legally binding obligations of the Company, enforceable in accordance with their terms, subject to any applicable bankruptcy, insolvency (including, without limitation, all laws relating to fraudulent transfers), reorganization, moratorium or similar laws affecting the enforcement of creditors' rights generally and subject to the effect of general principles of equity, including, without limitation, concepts of materiality, reasonableness, good faith and fair dealing (regardless of whether enforcement is considered in a proceeding in equity or at law). Section 2.05 Registrar and Paying Agent. The Company shall maintain an office or agency where Securities may be presented for registration of transfer, for exchange or, if applicable, for conversion (in the case of conversion, as agent for the Guarantor) ("Registrar") and an office or agency where Securities may be presented for payment ("Paying Agent"). The Registrar shall keep a register of the Securities and of their transfer. The Company may have one or more co-registrars and one or more additional paying agents. The term "Paying Agent" includes any additional paying agent. The Company shall enter into an appropriate agency agreement with any Registrar, Paying Agent or co-registrar not a party to this Indenture. The agreement shall implement the provisions of this Indenture that relate to such agent. The Company shall notify the Trustee of the name and address of any such agent. If the Company fails to maintain a Registrar or Paying Agent, the Trustee shall act as such. The Company initially appoints the Trustee as Registrar and Paying Agent. Section 2.06 Paying Agent To Hold Money in Trust. Each Paying Agent shall hold in trust for the benefit of the Securityholders or the Trustee all money held by the Paying Agent for the payment of principal or interest on the Securities, and shall notify the Trustee of any default by the Company (or any other obligor on the Securities) in making any such payment. While any such default continues, the Trustee shall require a Paying Agent to pay all money held by it to the Trustee. If the Company or a Subsidiary acts as Paying Agent, it shall segregate the money and hold it as a separate trust fund. The Company at any time may require a Paying Agent to pay all money held by it to the Trustee. Upon doing so the Paying Agent shall have no further liability for the money. 9 Section 2.07 Securityholder Lists. The Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of Securityholders. If the Trustee is not the Registrar, the Company shall furnish to the Trustee on or before each Interest Payment Date and at such other times as the Trustee may request in writing a list in such form and as of such date as the Trustee may reasonably require of the names and addresses of Securityholders. Section 2.08 Transfer and Exchange. Where a Security is presented to the Registrar or a co-registrar with a request to register a transfer, the Registrar shall register its transfer as requested if its reasonable requirements are met. Where Securities are presented to the Registrar or a co-registrar with a request to exchange them for an equal principal amount of Securities of other denominations, the Registrar shall make the exchange as requested if the same requirements are met. To permit transfers and exchanges, the Trustee shall authenticate Securities at the Registrar's request. The Registrar need not transfer or exchange any Security selected for redemption, except the unredeemed part thereof if the Security is redeemed in part, or transfer or exchange any Securities for a period of 15 days before a selection of Securities to be redeemed. The Company may charge a reasonable fee for any transfer or exchange (including the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any such transfer or exchange and any other expenses in connection therewith) but not for any exchange pursuant to Section 2.11, 3.06 or 12.05. This Section 2.08 is subject to the provisions of any series of the Securities providing for the subordination or seniority of such series and the related Guarantees of such series in right of payment to other indebtedness of the Company and the Guarantor, respectively. Section 2.09 Replacement Securities. If the Holder of a Security claims that the Security has been lost, destroyed or wrongfully taken, the Company shall issue and the Trustee shall authenticate a replacement Security and the Guarantor shall endorse the Guarantee thereon if the Trustee's reasonable requirements are met. An indemnity bond must be sufficient in the judgment of the Company, the Guarantor and the Trustee to protect the Company, the Guarantor, the Trustee, the Paying Agent, the Registrar or any co-registrar from any loss which any of them may suffer if a Security is replaced. The Company may charge for its expenses in replacing a Security. Every replacement Security is an additional obligation of the Company and the Guarantor. Section 2.10 Outstanding Securities. Securities outstanding at any time are all Securities authenticated by the Trustee except for those presented to it by the Company or its designee for cancellation and those described in this Section as not outstanding. A Security does not cease to be outstanding because the Company, the Guarantor or one of their Affiliates holds the Security. 10 If a Security is replaced pursuant to Section 2.09, it ceases to be outstanding unless the Trustee receives proof satisfactory to it that the replaced Security is held by a bona fide purchaser. If the Paying Agent holds on a redemption date or maturity date money sufficient to pay Securities payable on that date, then on and after that date such Securities cease to be outstanding and interest on them ceases to accrue. If a Security is called for redemption or if it matures in less than six months and if the Company has satisfied its obligation to pay the Security, or if a Security has been converted in accordance with the provisions of Article 10, the Company and the Trustee need not treat the Security as outstanding in determining whether Holders of the required principal amount of Securities have concurred in any direction, waiver or consent. For each series of Original Issue Discount Securities, the principal amount of such Securities that shall be deemed to be outstanding and used to determine whether the necessary Holders have given any request, demand, authorization, direction, notice, consent or waiver shall be the principal amount of such Securities that could be declared to be due and payable upon acceleration upon an Event of Default as of the date of such determination. When requested by the Trustee, the Company will advise the Trustee of such amount, showing its computations in reasonable detail. Subject to the foregoing provisions of this Section, each Security delivered under this Indenture upon registration of transfer of or in exchange for or in lieu of any other Security shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by such other Security. Section 2.11 Temporary Securities. Until definitive Securities are ready for delivery, the Company may prepare and the Trustee shall authenticate temporary Securities and the Guarantor shall endorse the Guarantee thereon. Temporary Securities shall be substantially in the form of definitive Securities but may have variations that the Company considers appropriate for temporary Securities. Without unreasonable delay, the Company shall prepare and the Trustee shall authenticate definitive Securities and the Guarantor shall endorse the Guarantee thereon in exchange for temporary Securities. Section 2.12 Cancellation. The Company at any time may deliver Securities to the Trustee for cancellation. The Registrar and the Paying Agent shall forward to the Trustee any Securities surrendered to them for transfer, exchange, conversion or payment. The Trustee and no one else shall cancel and destroy all Securities surrendered for transfer, exchange, conversion, payment or cancellation in accordance with its customary procedure. Unless the Authorizing Resolution so provides, the Company may not issue new Securities to replace Securities it has paid or delivered to the Trustee for cancellation. Section 2.13 Defaulted Interest. If the Company defaults in a payment of interest on the Securities, it shall pay the defaulted interest in any lawful manner. It may pay the defaulted interest, plus any interest payable on the interest (to the extent lawful) if an Event of Default has occurred and is continuing, to the Persons who are Securityholders on a subsequent special record date (the "Special Record Date"). The Company shall fix the subsequent Special Record Date and payment date. At least 15 days before such Special Record Date, the Company shall give notice to the Trustee and shall mail to each Securityholder a notice that states the subsequent Special Record Date, the payment date, and the amount of defaulted interest to be paid. 11 Section 2.14 Global Securities. Unless the Authorizing Resolution provides otherwise, the Company may issue some or all of the Securities of a Series in temporary or permanent global form. A global Security shall represent that amount of Securities of a Series as specified in the global Security or as endorsed thereon from time to time. At the Company's request, the Registrar shall endorse a global Security to reflect the amount of any increase or decrease in the Securities represented thereby. The Company may issue a global Security only to a depositary designated by the Company. A depositary may transfer a global Security only as a whole to its nominee or to a successor depositary. The Authorizing Resolution may establish, among other things, the manner of paying principal and interest on a global Security and whether and upon what terms a beneficial owner of an interest in a global Security may exchange such interest for definitive Securities. The Company and the Trustee shall not be responsible for any acts or omissions of a depositary, for any depositary records of beneficial ownership interests or for any transactions between the depositary and beneficial owners. ARTICLE 3. REDEMPTION Section 3.01 Notices to Trustee. Securities of a Series that are redeemable prior to maturity shall be redeemable in accordance with their terms and, unless the Authorizing Resolution provides otherwise, in accordance with this Article. If the Company wants to redeem Securities pursuant to Paragraph 5 of the Securities, it shall notify the Trustee in writing of the redemption date and the principal amount of Securities to be redeemed. Any such notice may be canceled at any time prior to notice of such redemption being mailed to Holders. Any such canceled notice shall be void and of no effect. If the Company wants to credit any Securities previously redeemed, retired or acquired against any redemption pursuant to Paragraph 6 of the Securities, it shall notify the Trustee of the amount of the credit and it shall deliver any Securities not previously delivered to the Trustee for cancellation with such notice. The Company shall give each notice provided for in this Section 3.01 at least 10 Business Days before the notice of any such redemption is to be mailed to Holders (unless a shorter notice shall be satisfactory to the Trustee). 12 Section 3.02 Selection of Securities To Be Redeemed. If less than all the Securities of a Series are to be redeemed, the Trustee shall select the Securities to be redeemed, if the Securities of such Series are listed on a national securities exchange, in accordance with the rules of such exchange, or if the Securities of such Series are not so listed, on either a pro rata basis or by lot or by such method as the Trustee shall deem fair and appropriate. The Trustee shall make the selection from Securities outstanding and not previously called for redemption. Securities in denominations of $1,000 may only be redeemed in whole. The Trustee may select for redemption portions (equal to $1,000 or any integral multiple thereof) of the principal of Securities that have denominations larger than $1,000. Provisions of this Indenture that apply to Securities called for redemption also apply to portions of Securities called for redemption. Section 3.03 Notice of Redemption. At least 30 days but not more than 60 days before a redemption date, the Company shall mail a notice of redemption by first-class mail to each Holder of Securities to be redeemed. The notice shall identify the Securities to be redeemed and shall state: (1) the redemption date; (2) the redemption price; (3) the name and address of the Paying Agent; (4) in the event that any Security is to be redeemed in part only, the portion of the principal amount thereof to be redeemed and that on and after the redemption date, upon surrender of such Security, a new Security or Securities in principal amount equal to the unredeemed portion thereof will be issued; (5) that Securities called for redemption must be surrendered to the Paying Agent to collect the redemption price; (6) that interest on Securities called for redemption ceases to accrue on and after the redemption date; (7) that the Securities are being redeemed pursuant to the mandatory redemption or the optional redemption provisions, as applicable; and (8) if applicable, the current Conversion Price and the date on which the right to convert the Securities into Common Stock will expire. At the Company's request, the Trustee shall give the notice of redemption in the Company's name and at the Company's expense. Section 3.04 Effect of Notice of Redemption. Once notice of redemption is mailed, Securities called for redemption become due and payable on the redemption date and at the redemption price. Upon surrender to the Paying Agent, such Securities shall be paid at the redemption price, plus accrued interest to the redemption date. 13 Section 3.05 Deposit of Redemption Price. Prior to the redemption date, the Company or its designee shall deposit with the Paying Agent money sufficient to pay the redemption price of and accrued and unpaid interest on all Securities to be redeemed on that date. Section 3.06 Securities Redeemed in Part. Upon surrender of a Security that is redeemed in part, the Trustee shall authenticate for the Holder a new Security and the Guarantor shall endorse the Guarantee thereon equal in principal amount to the unredeemed portion of the Securities surrendered. ARTICLE 4. COVENANTS Section 4.01 Payment of Securities. The Company shall pay the principal of and interest on Securities of a Series on the dates and in the manner provided in the Securities of the Series. An installment of principal or interest shall be considered paid on the date due if the Trustee or Paying Agent holds on that date immediately available legal tender funds designated for, available and sufficient to pay the installment. The Company shall pay interest on overdue principal at the rate borne by the Series; it shall pay interest on overdue installments of interest at the same rate to the extent lawful. Section 4.02 SEC Reports. Within 15 days after each of the Guarantor and the Company files with the SEC copies of its annual reports and other information, documents and reports (or copies of such portions of any of the foregoing as the SEC may by rules and regulations prescribe) which they are required to file with the SEC pursuant to Section 13 or 15(d) of the Exchange Act, the Guarantor and the Company shall file the same with the Trustee. If the Guarantor shall cease to be subject to the requirements of Section 13 or 15(d) of the Exchange Act, the Guarantor shall file with the Trustee, within 15 days after the last date on which it would have been required to make such a filing with the SEC, financial statements, including any notes thereto, and a "Management's Discussion and Analysis of Financial Condition and Results of Operations," each comparable to that which the Guarantor would have been required to include in such annual reports, information, documents or other reports, if the Guarantor were then subject to the requirements of Section 13 or 15(d) of the Exchange Act. The Company and the Guarantor also shall comply with the other provisions of TIA Section 314(a). Section 4.03 Compliance Certificate. The Company and the Guarantor each shall deliver to the Trustee within 120 days after the end of their respective fiscal year an Officers' Certificate satisfying the requirements of Section 3.14(a)(4) of the TIA and stating whether or not the signers know of any Default or Event of Default. If they do know of such a Default or Event of Default, the certificate shall describe the Default or Event of Default. 14 ARTICLE 5. SUCCESSOR CORPORATION Section 5.01 When the Company and the Guarantor May Merge, etc. Neither the Company nor the Guarantor shall consolidate with or merge into, or transfer all or substantially all of its assets to, any other person unless (i) such other Person is a corporation organized and existing under the laws of the United States or a State thereof or the District of Columbia and expressly assumes by supplemental indenture all the obligations of the Company or the Guarantor under the Indenture and either the Securities or the Guarantee, as the case may be; and (ii) immediately after giving effect to such transaction no Default or Event of Default shall have occurred and be continuing. Thereafter all such obligations of the predecessor corporation shall terminate. ARTICLE 6. SUBORDINATION Section 6.01 Agreement To Subordinate. The provisions of this Article 6 shall apply to the Securities of a Series to the extent specified in the Authorizing Resolution relating to such Series. Each reference in this Article 6 to "a Security" or "the Securities" refers to the Securities of each such Series so designated. The Company, for itself and its successors, and each Holder, by accepting Securities, agrees that the payment of the principal of, interest on or any other amounts due on the Securities are subordinated in right of payment, to the extent and in the manner stated in this Article 6, to the prior payment in full of all Senior Indebtedness of the Company. Each Holder by accepting Securities authorizes and directs the Trustee on behalf of such Holder to take such action as may be necessary or appropriate to effectuate, as between the holders of Senior Indebtedness of the Company and such Holder, the subordination provided in this Article 6 and appoints the Trustee attorney-in-fact for such Holder for such purpose. This Article 6 shall constitute a continuing offer to all Persons who, in reliance upon such provisions, become holders of, or continue to hold, Senior Indebtedness of the Company, and such provisions are made for the benefit of the holders of Senior Indebtedness of the Company and such holders are made obligees hereunder and they and/or each of them may enforce such provisions. Section 6.02 Company Not To Make Payments with Respect to Securities in Certain Circumstances. (a) Upon the maturity of any Senior Indebtedness of the Company by lapse of time, acceleration (unless waived) or otherwise, all principal thereof and interest thereon shall first be paid in full, or such payment duly provided for in cash or in a manner satisfactory to the holders of such Senior Indebtedness of the Company, before any payment is made on account of the principal of or interest on the Securities or to acquire any of the Securities. 15 (b) In the event that notwithstanding the provisions of this Section 6.02 the Company shall make any payment to the Trustee on account of the principal of or interest on the Securities after the happening of a default in payment of the principal of or interest on Senior Indebtedness of the Company, then, unless and until such default shall have been cured or waived or shall have ceased to exist, such payment (subject to the provisions of Sections 6.06 and 6.07) shall be held by the Trustee, in trust for the benefit of, and shall be paid forthwith over and delivered to, the holders of Senior Indebtedness of the Company (pro rata as to each of such holders on the basis of the respective amounts of Senior Indebtedness of the Company held by them) or their representative or the trustee under the indenture or other agreement (if any) pursuant to which Senior Indebtedness of the Company may have been issued, as their respective interests may appear, for application to the payment of all Senior Indebtedness of the Company remaining unpaid to the extent necessary to pay all Senior Indebtedness of the Company in full in accordance with its terms, after giving effect to any concurrent payment or distribution to or for the holders of the Senior Indebtedness of the Company. The Company shall give prompt written notice to the Trustee of any default in the payment of principal of or interest on any Senior Indebtedness of the Company. Section 6.03 Securities Subordinated to Prior Payment of All Senior Indebtedness of the Company on Dissolution, Liquidation or Reorganization of the Company. Upon any distribution of assets of the Company in any dissolution, winding up, liquidation or reorganization of the Company (whether in bankruptcy, insolvency or receivership proceedings or upon an assignment for the benefits of creditors or otherwise): (a) the holders of all Senior Indebtedness of the Company shall first be entitled to receive payment in full of the principal thereof and interest due thereon before the Holders of the Securities are entitled to receive any payment on account of the principal of or interest on the Securities; (b) any payment or distribution of assets of the Company of any kind or character, whether in cash, property or securities, to which the Holders of the Securities or the Trustee on behalf of the Holders of the Securities would be entitled except for the provisions of this Article 6, including any such payment or distribution which may be payable or deliverable by reason of the payment of any other indebtedness of the Company being subordinated to the payment of the Securities, shall be paid by the liquidating trustee or agent or other Person making such payment or distribution directly to the holders of the Senior Indebtedness of the Company or their representative, or to the trustee under any indenture under which Senior Indebtedness of the Company may have been issued (pro rata as to each such holder, representative or trustee on the basis of the respective amounts of unpaid Senior Indebtedness of the Company held or represented by each), to the extent necessary to make payment in full of all Senior Indebtedness of the Company remaining unpaid, after giving effect to any concurrent payment or distribution or provision therefor to the holders of such Senior Indebtedness of the Company, except that Holders of the Securities would be entitled to receive securities that are subordinated to Senior Indebtedness of the Company to at least the same extent as the Securities; and 16 (c) in the event that notwithstanding the foregoing provisions of this Section 6.03, any payment or distribution of assets of the Company of any kind or character whether in cash, property or securities, including any such payment or distribution which may be payable or deliverable by reason of the payment of any other indebtedness of the Company being subordinated to the payment of the Securities, shall be received by the Trustee or the Holders of the Securities on account of principal of or interest on the Securities before all Senior Indebtedness of the Company is paid in full, or effective provision made for its payment, such payment or distribution (subject to the provisions of Sections 6.06 and 6.07) shall be received and held in trust for and shall be paid over to the holders of the Senior Indebtedness of the Company remaining unpaid or unprovided for or their representative, or to the trustee under any indenture under which such Senior Indebtedness of the Company may have been issued (pro rata as provided in subsection (b) above), for application to the payment of such Senior Indebtedness of the Company until all such Senior Indebtedness of the Company shall have been paid in full, after giving effect to any concurrent payment or distribution or provision therefor to the holders of such Senior Indebtedness of the Company, except that Holders of the Securities would be entitled to receive securities that are subordinated to Senior Indebtedness of the Company to at least the same extent as the Securities. The Company shall give prompt written notice to the Trustee of any dissolution, winding up, liquidation or reorganization of the Company. Section 6.04 Securityholders To Be Subrogated to Rights of Holders of Senior Indebtedness of the Company. Subject to the payment in full of all Senior Indebtedness of the Company, the Holders of the Securities shall be subrogated equally and ratably to the rights of the holders of the Senior Indebtedness of the Company to receive payments or distributions of assets of the Company applicable to the Senior Indebtedness of the Company until all amounts owing on the Securities shall be paid in full, and for the purpose of such subrogation no payments or distributions to the holders of the Senior Indebtedness of the Company by or on behalf of the Company or by or on behalf of the Holders of the Securities by virtue of this Article 6 which otherwise would have been made to the Holders of the Securities shall, as among the Company, its creditors other than holders of the Senior Indebtedness of the Company and the Holders of the Securities, be deemed to be payment by the Company to or on account of the Senior Indebtedness of the Company, it being understood that the provisions of this Article 6 are intended solely for the purpose of defining the relative rights of the Holders of the Securities, on the one hand, and the holders of the Senior Indebtedness of the Company, on the other hand. Section 6.05 Obligation of the Company Unconditional. Nothing contained in this Article 6 or elsewhere in this Indenture or in any Security is intended to or shall impair, as between the Company and the Holders of the Securities, the obligation of the Company, which is absolute and unconditional, to pay to the Holders of the Securities the principal of and interest on the Securities as and when the same shall become due and payable in accordance with their terms, or is intended to or shall affect the relative rights of the Holders of the Securities and creditors of the Company other than the holders of the Senior Indebtedness of the Company, nor shall anything herein or therein prevent the Trustee or the Holder of any Security from exercising all remedies otherwise permitted by applicable law upon default under this Indenture, subject to the rights, if any, under this Article 6 of the holders of Senior Indebtedness of the Company in respect of cash, property or securities of the Company received upon the exercise of any such remedy. Upon any distribution of assets of the Company referred to in this Article 6, the Trustee, subject to the provisions of Sections 9.01 and 9.02, and the Holders of the Securities shall be entitled to rely upon any order or decree made by any court of competent jurisdiction in which such dissolution, winding up, liquidation or reorganization proceedings are pending, or a certificate of the liquidating trustee or agent or other Person making any distribution to the Trustee or the Holders of the Securities, for the purpose of ascertaining the Persons entitled to participate in such distribution, the holders of the Senior Indebtedness of the Company and other Indebtedness of the Company, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article 6. 17 Nothing contained in this Article 6 or elsewhere in this Indenture or in any Security is intended to or shall affect the obligation of the Company to make, or prevent the Company from making, at any time except during the pendency of any dissolution, winding up, liquidation or reorganization proceeding, and except during the continuance of any default specified in Section 6.02 (not cured or waived), payments at any time of the principal of or interest on the Securities. Section 6.06 Knowledge of Trustee. Notwithstanding any provision of this Indenture, the Trustee shall not be charged with knowledge of the existence of any facts which would prohibit the making of any payment of monies to or by the Trustee until two Business Days after the Trustee shall have received written notice thereof from the Company, any Securityholder or any Paying Agent or the holder or representative of any class of Senior Indebtedness of the Company. Section 6.07 Application by Trustee of Monies Deposited With It. If at least two Business Days prior to the date on which by the terms of this Indenture any monies deposited with the Trustee or any Paying Agent may become payable for any purpose (including, without limitation, the payment of either the principal of or the interest on any Security) the Trustee shall not have received with respect to such monies the notice provided for in Section 6.06, then the Trustee shall have full power and authority to receive such monies and to apply the same to the purpose for which they were received and shall not be affected by any notice to the contrary which may be received by it on or after such date. This Section shall be construed solely for the benefit of the Trustee and such Paying Agent and shall not otherwise affect the rights of holders of Senior Indebtedness of the Company. Section 6.08 Subordination Rights Not Impaired by Acts or Omissions of Company or Holders of Senior Indebtedness of the Company. No right of any present or future holders of any Senior Indebtedness of the Company to enforce subordination as provided herein shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of the Company or by any act or failure to act, in good faith, by any such holder, or by any noncompliance by the Company with the terms of this Indenture, regardless of any knowledge thereof which any such holder may have or be otherwise charged with. The holders of Senior Indebtedness of the Company may extend, renew, modify or amend the terms of the Senior Indebtedness of the Company or any security therefor and release, sell or exchange such security and otherwise deal freely with the Company, all without affecting the liabilities and obligations of the parties to this Indenture or the Holders. No provision in any supplemental indenture which affects the superior position of the holders of Senior Indebtedness of the Company shall be effective against the holders of Senior Indebtedness of the Company who have not consented thereto. 18 Section 6.09 Securityholders Authorize Trustee To Effectuate Subordination of Securities. Each Holder of Securities by acceptance thereof authorizes and expressly directs the Trustee on its, his or her behalf to take such action as may be necessary or appropriate to effectuate the subordination provided in this Article 6 and appoints the Trustee its, his or her attorney-in-fact for such purpose, including, in the event of any dissolution, winding up, liquidation or reorganization of the Company (whether in bankruptcy, insolvency or receivership proceedings or upon an assignment for the benefit of creditors or otherwise) tending towards liquidation of the business and assets of the Company, the immediate filing of a claim for the unpaid balance of its, his or her Securities in the form required in said proceedings and cause said claim to be approved. If the Trustee does not file a proper claim or proof of debt in the form required in such proceedings prior to 30 days before the expiration of the time to file such claim or claims, then the holders of Senior Indebtedness of the Company have the right to file and are hereby authorized to file an appropriate claim for and on behalf of the Holders of said Securities. Section 6.10 Right of Trustee To Hold Senior Indebtedness of the Company. The Trustee shall be entitled to all of the rights set forth in this Article 6 in respect of any Senior Indebtedness of the Company at any time held by it to the same extent as any other holder of Senior Indebtedness of the Company and nothing in this Indenture shall be construed to deprive the Trustee of any of its rights as such holder. Section 6.11 Article Six Not To Prevent Events of Default. The failure to make a payment on account of principal or interest by reason of any provision in this Article 6 shall not be construed as preventing the occurrence of an Event of Default under Section 8.01. ARTICLE 7. GUARANTEE Section 7.01 Guarantee. The Guarantor hereby unconditionally guarantees (such guarantee to be referred to herein as the "Guarantee") to each Holder of a Security authenticated and delivered by the Trustee and to the Trustee and its successors and assigns, irrespective of the validity and enforceability of this Indenture, the Securities or the obligations of the Company hereunder or thereunder, (i) the due and punctual payment of the principal of and any interest on the Securities, whether at maturity or on an Interest Payment Date, by acceleration or otherwise, and interest on the overdue principal of and interest, if any, on the Securities, if lawful, and all other obligations of the Company to the Holders or the Trustee hereunder or under the Securities shall be promptly paid in full, all in accordance with the terms hereof and thereof including all amounts payable to the Trustee under Section 9.07 hereof, and (ii) in case of any extension of time of payment or renewal of any Securities or any of such other obligations, that the same shall be promptly paid in full when due or to be performed in accordance with the terms of the extension or renewal, whether at stated maturity, by acceleration or otherwise. 19 If the Company fails to make any payment when due of any amount so guaranteed for whatever reason, the Guarantor shall be obligated to pay the same immediately. The Guarantor hereby agrees that its obligations hereunder shall be continuing, absolute and unconditional, irrespective of, and shall be unaffected by, the validity, regularity or enforceability of the Securities, this Indenture, the absence of any action to enforce the same, any waiver or consent by any Holder of the Securities or the Trustee with respect to any provisions hereof or thereof, the recovery of any judgment against the Company, any action to enforce the same or any other circumstance which might otherwise constitute a legal or equitable discharge or defense of the Guarantor. The Guarantor hereby waives diligence, presentment, demand of payment, demand of performance, filing of claims with a court in the event of insolvency or bankruptcy of the Company, any right to require a proceeding first against the Company, the benefit of discussion, protest, notice and all demand whatsoever and covenants that this Guarantee shall not be discharged except by complete performance of the obligations contained in the Securities, in this Indenture and in this Article 7. If any Securityholder or the Trustee is required by any court or otherwise to return to the Company or the Guarantor, or any custodian, trustee, liquidator or other similar official acting in relation to the Company or the Guarantor, any amount paid by the Company or the Guarantor to the Trustee or such Securityholder, this Article 7, to the extent theretofore discharged, shall be reinstated in full force and effect. The Guarantor agrees that it shall not be entitled to any right of subrogation in relation to the Securityholders in respect of any obligations guaranteed hereby until payment in full of all obligations guaranteed hereby. The Guarantor further agrees that, as between the Guarantor, on the one hand, and the Holders and the Trustee, on the other hand, (i) the maturity of the obligations guaranteed hereby may be accelerated as provided in Article 8 for the purposes of the Guarantee, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the obligations guaranteed hereby, and (ii) in the event of any declaration of acceleration of such obligations as provided in Article 8 such obligations (whether or not due and payable) shall forthwith become due and payable by the Guarantor for the purpose of this Article 7. In addition, without limiting the foregoing, upon the effectiveness of an acceleration under Article 8, the Trustee may make a demand for payment on the Securities under the Guarantee provided hereunder and not discharged. The Guarantor shall be subrogated to all rights of the Holder of any Securities against the Company in respect of any amounts paid to the Holder by the Guarantor pursuant to the provisions of this Guarantee; provided that the Guarantor shall not be entitled to enforce, or to receive any payments arising out of or based upon, such right of subrogation until the principal of and interest on all the Securities shall have been paid in full. The Guarantee set forth in this Section 7.01 shall not be valid or become obligatory for any purpose with respect to a Security until the certificate of authentication on such Security shall have been signed by the Trustee or any duly appointed agent. Section 7.02 Agreement To Subordinate. The provisions of this Article 7 shall apply to the Securities of a Series to the extent specified in the Authorizing Resolution relating to such Series. Each reference in this Article 7 to "a Security" or "the Securities" refers to the Securities of each such Series so designated. 20 The Guarantor, for itself and its successors, and each Holder, by accepting the Securities, agrees that the payment of the principal of, interest on and any other amounts due on the Securities pursuant to the Guarantee are subordinated in right of payment, to the extent and in the manner stated in this Article 7, to the prior payment in full of all Senior Indebtedness of the Guarantor. Each Holder by accepting Securities authorizes and directs the Trustee on behalf of such Holder to take such action as may be necessary or appropriate to effectuate, as between the holders of Senior Indebtedness of the Guarantor and such Holder, the subordination provided in this Article 7 and appoints the Trustee attorney-in-fact for such Holder for such purpose. This Article shall constitute a continuing offer to all Persons who, in reliance upon such provisions, become holders of, or continue to hold, Senior Indebtedness of the Guarantor, and such provisions are made for the benefit of the holders of Senior Indebtedness of the Guarantor, and such holders are made obligees hereunder and they and/or each of them may enforce such provisions. Section 7.03 Guarantor Not To Make Payments with Respect to Securities in Certain Circumstances. (a) Upon the maturity of any Senior Indebtedness of the Guarantor by lapse of time, acceleration (unless waived) or otherwise, all principal thereof and interest thereon shall first be paid in full, or such payment duly provided for in cash or in a manner satisfactory to the holders of such Senior Indebtedness of the Guarantor, before any payment, pursuant to the Guarantee, is made on account of the principal of or interest on the Securities or to acquire any of the Securities. (b) In the event that notwithstanding the provisions of this Section 7.03 the Guarantor shall make any payment to the Trustee on account of the principal of or interest on the Securities after the happening of a default in payment of the principal of or interest on Senior Indebtedness of the Guarantor, then, unless and until such default shall have been cured or waived or shall have ceased to exist, such payment (subject to the provisions of Sections 7.07 and 7.08) shall be held by the Trustee, in trust for the benefit of, and shall be paid forthwith over and delivered to, the holders of Senior Indebtedness of the Guarantor (pro rata as to each of such holders on the basis of the respective amounts of Senior Indebtedness of the Guarantor held by them) or their representative or the trustee under the indenture or other agreement (if any) pursuant to which Senior Indebtedness of the Guarantor may have been issued, as their respective interests may appear, for application to the payment of all Senior Indebtedness of the Guarantor remaining unpaid to the extent necessary to pay all Senior Indebtedness of the Guarantor in full in accordance with its terms, after giving effect to any concurrent payment or distribution to or for the holders of Senior Indebtedness of the Guarantor. The Guarantor shall give prompt written notice to the Trustee of any default in the payment of principal of or interest on any Senior Indebtedness of the Guarantor. 21 Section 7.04 Guarantee Subordinated to Prior Payment of All Senior Indebtedness of the Guarantor on Dissolution, Liquidation or Reorganization of the Guarantor. Upon any distribution of assets of the Guarantor in any dissolution, winding up, liquidation or reorganization of the Guarantor (whether in bankruptcy, insolvency or receivership proceedings or upon an assignment for the benefit of creditors or otherwise): (a) the holders of all Senior Indebtedness of the Guarantor shall first be entitled to receive payment in full of the principal thereof and interest due thereon before the Holders of the Securities are entitled to receive any payment on account of the principal of or interest on the Securities pursuant to the Guarantee; (b) any payment or distribution of assets of the Guarantor of any kind or character, whether in cash, property or securities, to which the Holders of the Securities or the Trustee on behalf of the Holders of the Securities would be entitled except for the provisions of this Article 7, including any such payment or distribution which may be payable or deliverable by reason of the payment of any other indebtedness of the Guarantor being subordinated to the payment of the Securities, shall be paid by the liquidating trustee or agent or other Person making such payment or distribution directly to the holders of the Senior Indebtedness of the Guarantor or their representative, or to the trustee under any indenture under which Senior Indebtedness of the Guarantor may have been issued (pro rata as to each such holder, representative or trustee on the basis of the respective amounts of unpaid Senior Indebtedness of the Guarantor held or represented by each), to the extent necessary to make payment in full of all Senior Indebtedness of the Guarantor remaining unpaid, after giving effect to any concurrent payment or distribution or provision therefor to the holders of such Senior Indebtedness of the Guarantor, except that Holders of the Securities would be entitled to receive securities that are subordinated to Senior Indebtedness of the Guarantor to at least the same extent as the Securities; and (c) in the event that, notwithstanding the foregoing provisions of this Section 7.04, any payment or distribution of assets of the Guarantor of any kind or character, whether in cash, property or securities, including any such payment or distribution which may be payable or deliverable by reason of the payment of any other indebtedness of the Guarantor being subordinated to the payment of the Securities, shall be received by the Trustee or the Holders of the Securities on account of principal of or interest on the Securities before all Senior Indebtedness of the Guarantor is paid in full, or effective provision made for its payment, such payment or distribution (subject to the provisions of Sections 7.07 and 7.08) shall be received and held in trust for and shall be paid over to the holders of the Senior Indebtedness of the Guarantor remaining unpaid or unprovided for or their representative, or to the trustee under any indenture under which such Senior Indebtedness of the Guarantor may have been issued (pro rata as provided in subsection (b) above), for application to the payment of such Senior Indebtedness of the Guarantor until all such Senior Indebtedness of the Guarantor shall have been paid in full, after giving effect to any concurrent payment or distribution or provision therefor to the holders of such Senior Indebtedness of the Guarantor, except that Holders of the Securities would be entitled to receive securities that are subordinated to Senior Indebtedness of the Guarantor to at least the same extent as the Securities. 22 Upon any distribution of assets of the Guarantor referred to in this Article 7, the Trustee, subject to the provisions of Sections 9.01 and 9.02, and the Holders of the Securities shall be entitled to rely upon any order or decree made by any court of competent jurisdiction in which such dissolution, winding up, liquidation or reorganization proceedings are pending, or a certificate of the liquidating trustee or agent or other Person making any distribution to the Trustee or the Holders of the Securities, for the purpose of ascertaining the Persons entitled to participate in such distribution, the holders of the Senior Indebtedness of the Guarantor and other Indebtedness of the Guarantor, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article 7. The Guarantor shall give prompt written notice to the Trustee of any dissolution, winding up, liquidation or reorganization of the Guarantor. Section 7.05 Securityholders To Be Subrogated to Rights of Holders of Senior Indebtedness of the Guarantor. Subject to the payment in full of all Senior Indebtedness of the Guarantor, the Holders of the Securities shall be subrogated equally and ratably to the rights of the holders of the Senior Indebtedness of the Guarantor to receive payments or distributions of assets of the Guarantor applicable to the Senior Indebtedness of the Guarantor until all amounts owing on the Securities shall be paid in full, and for the purpose of such subrogation no payments or distributions to the holders of the Senior Indebtedness of the Guarantor by or on behalf of the Guarantor or by or on behalf of the Holders of the Securities by virtue of this Article 7 which otherwise would have been made to the Holders of the Securities shall, as among the Guarantor, its creditors other than holders of Senior Indebtedness of the Guarantor and the Holders of the Securities, be deemed to be payment by the Guarantor to or on account of the Senior Indebtedness of the Guarantor, it being understood that the provisions of this Article 7 are intended solely for the purpose of defining the relative rights of the Holders of the Securities, on the one hand, and the holders of the Senior Indebtedness of the Guarantor, on the other hand. Section 7.06 Obligation of the Guarantor Unconditional. Nothing contained in this Article 7 or elsewhere in this Indenture or in any Security is intended to or shall impair, as between the Guarantor and the Holders of the Securities, the obligation of the Guarantor, which is absolute and unconditional, to pay to the Holders of the Securities the principal of and interest on the Securities as and when the same shall become due and payable in accordance with the terms of the Guarantee, or is intended to or shall affect the relative rights of the Holders of the Securities and creditors of the Guarantor other than the holders of the Senior Indebtedness of the Guarantor, nor shall anything herein or therein prevent the Trustee or the Holder of any Security from exercising all remedies otherwise permitted by applicable law upon Default under this Indenture, subject to the rights, if any, under this Article 7 of the holders of Senior Indebtedness of the Guarantor in respect of cash, property or securities of the Guarantor received upon the exercise of any such remedy. Nothing contained in this Article 7 or elsewhere in this Indenture or in any Security is intended to or shall affect the obligation of the Guarantor to make, or prevent the Guarantor from making, at any time except during the pendency of any dissolution, winding up, liquidation or reorganization proceeding, and except during the continuance of any default specified in Section 7.03 (not cured or waived), payments at any time of the principal of or interest on the Securities pursuant to the Guarantee. 23 Section 7.07 Knowledge of Trustee. Notwithstanding any provision of this Indenture, the Trustee shall not be charged with knowledge of the existence of any facts which would prohibit the making of any payment of monies to or by the Trustee until two Business Days after the Trustee shall have received written notice thereof from the Guarantor, any Securityholder or any Paying Agent or the holder or representative of any class of Senior Indebtedness of the Guarantor. Section 7.08 Application by Trustee of Monies Deposited With It. If at least two Business Days prior to the date on which by the terms of this Indenture any monies deposited with the Trustee or any Paying Agent may become payable for any purpose (including, without limitation, the payment of either the principal of or the interest on any Security) the Trustee shall not have received with respect to such monies the notice provided for in Section 7.07, then the Trustee shall have full power and authority to receive such monies and to apply the same to the purpose for which they were received and shall not be affected by any notice to the contrary which may be received by it on or after such date. This Section shall be construed solely for the benefit of the Trustee and such Paying Agent and shall not otherwise affect the rights of holders of Senior Indebtedness of the Guarantor. Section 7.09 Subordination Rights Not Impaired by Acts or Omissions of Guarantor or Holders of Senior Indebtedness of the Guarantor. No right of any present or future holders of any Senior Indebtedness of the Guarantor to enforce subordination as provided herein shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of the Guarantor or by any act or failure to act, in good faith, by any such holder, or by any noncompliance by the Guarantor with the terms of this Indenture, regardless of any knowledge thereof which any such holder may have or be otherwise charged with. The holders of Senior Indebtedness of the Guarantor may extend, renew, modify or amend the terms of the Senior Indebtedness of the Guarantor, or any security therefor and release, sell or exchange such security and otherwise deal freely with the Guarantor, all without affecting the liabilities and obligations of the parties to the Indenture or the Holders. No provision in any supplemental indenture which affects the superior position of the holders of Senior Indebtedness of the Guarantor shall be effective against the holders of Senior Indebtedness of the Guarantor who have not consented thereto. Section 7.10 Securityholders Authorize Trustee To Effectuate Subordination of Guarantee. Each Holder of Securities by acceptance thereof authorizes and expressly directs the Trustee on its, his or her behalf to take such action as may be necessary or appropriate to effectuate the subordination provided in this Article 7 and appoints the Trustee its, his or her attorney-in-fact for such purpose, including, in the event of any dissolution, winding up, liquidation or reorganization of the Guarantor (whether in bankruptcy, insolvency or receivership proceedings or upon an assignment for the benefit of creditors or otherwise) tending towards liquidation of the business and assets of the Guarantor, the immediate filing of a claim for the unpaid balance, pursuant to the Guarantee, of its, his or her Securities, in the form required in said proceedings and cause said claim to be approved. If the Trustee does not file a proper claim or proof of debt in the form required in such proceeding prior to 30 days before the expiration of the time to file such claim or claims, then the holders of Senior Indebtedness of the Guarantor have the right to file and are hereby authorized to file an appropriate claim for and on behalf of the Holders of said Securities. 24 Section 7.11 Right of Trustee To Hold Senior Indebtedness of the Guarantor. The Trustee shall be entitled to all of the rights set forth in this Article 7 in respect of any Senior Indebtedness of the Guarantor at any time held by it to the same extent as any other holder of Senior Indebtedness of the Guarantor, and nothing in this Indenture shall be construed to deprive the Trustee of any of its rights as such holder. Section 7.12 Article 7 Not To Prevent Events of Default. The failure to make a payment on account of principal or interest by reason of any provision in this Article 7 shall not be construed as preventing the occurrence of an Event of Default under Section 8.01. Section 7.13 Execution and Delivery of Guarantee. To evidence the Guarantee set forth in this Article 7, the Guarantor hereby agrees that a notation of the Guarantee, substantially in the form established by or pursuant to an Authorizing Resolution or in one or more supplemental indentures in accordance with Section 2.01, shall be endorsed on each Security authenticated and delivered by the Trustee and that this Indenture shall be executed on behalf of the Guarantor by the Chairman of the Board, its President or one of its Vice Presidents under a facsimile of its seal reproduced thereon. The Guarantor hereby agrees that its Guarantee shall remain in full force and effect notwithstanding any failure to endorse on each Security a notation of the Guarantee. If an Officer whose signature is on this Indenture or on the Securities no longer holds that office at the time the Trustee authenticates the Security on which a notation of the Guarantee is endorsed, the Guarantee shall be valid nevertheless. The delivery of any Security by the Trustee, after the authentication thereof hereunder, shall constitute due delivery of the Guarantee set forth in this Indenture on behalf of the Guarantor. Section 7.14 Subordination of Indebtedness Owed by the Company to the Guarantor. Any indebtedness owed by the Company to the Guarantor shall be subordinate to all obligations of the Company with respect to the Securities and this Indenture to the same extent as the Securities are subordinated to Senior Indebtedness of the Company. Section 7.15 Officers' Certificate. If there occurs an event referred to in the first sentence of Section 7.04(c) or the first sentence of Section 7.04, the Guarantor shall promptly give to the Trustee an Officers' Certificate (on which the Trustee may conclusively rely) identifying all holders of Senior Indebtedness of the Guarantor and the principal amount of Senior Indebtedness of the Guarantor then outstanding held by each such holder and stating the reasons why such Officers' Certificate is being delivered to the Trustee. 25 ARTICLE 8. DEFAULTS AND REMEDIES Section 8.01 Events of Default. An "Event of Default" on a Series occurs if: (1) the Company or the Guarantor defaults in the payment of interest on any Security of the Series when the same becomes due and payable and the default continues for a period of 30 days whether or not such payment shall be prohibited by the provisions of Article 6 or Article 7; or (2) the Company or the Guarantor defaults in the payment of the principal of any Security of the Series when the same becomes due and payable at maturity or upon redemption, whether or not such payment shall be prohibited by the provisions of Article 6 or Article 7; or (3) the Company or the Guarantor fails to comply with any of its other agreements in the Securities, the Guarantee or this Indenture applicable to the Series and such failure continues for the period and after the notice specified below; or (4) there occurs a default in the payment of indebtedness of the Company, the Guarantor or any Subsidiary under the terms of the instrument evidencing or securing such indebtedness permitting the holder thereof to accelerate the payment of in excess of an aggregate of $10,000,000 in principal amount of such indebtedness (after the lapse of applicable grace periods) or, in the case of defaults other than payment defaults, there occurs an acceleration of any such indebtedness if such acceleration is not rescinded or annulled within 10 days after such acceleration; provided, the term "indebtedness" as used in this Section 8.01(4) shall not include an acceleration of or default on Non-Recourse Indebtedness (a) if the Guarantor would be able to declare a dividend pursuant to the terms of such Series in the amount of the excess of the aggregate book value of all property (net of any previous write-downs or reserves in respect of such property) subject to the Non-Recourse Indebtedness being accelerated or in default over such Non-Recourse Indebtedness or (b) which consists of a purchase money obligation, provided such purchase money obligation does not exceed $10,000,000 in aggregate principal amount, whether or not the Guarantor is so diligently contesting); or (5) a final judgment for the payment of money in an amount in excess of $10,000,000 shall be entered against the Company, the Guarantor or any Subsidiary, and shall remain undischarged for a period (during which execution shall not be effectively stayed) of 60 days after the date on which the right to appeal has expired; provided the term "final judgment" shall not include a Non-Recourse Judgment unless the book value of all property (net of any previous write-downs or reserves in respect of such property) subject to such Non-Recourse Judgment exceeds the amount of such Non-Recourse Judgment by more than $10,000,000; or (6) there occurs as "Event of Default," as that term is defined in the indenture relating to the 8-3/4% Senior Subordinated Notes due 2006 issued by Toll Corp., a Delaware corporation ("Toll Corp."), the 7-3/4% Senior Subordinated Notes due 2007 issued by Toll Corp., the 8-1/8% Senior Subordinated Notes due 2009 issued by Toll Corp., the 8% Senior Subordinated Notes due 2009 issued by Toll Corp. or the 8-1/4% Senior Subordinated Notes due 2011 issued by Toll Corp. (each such series being hereinafter referred to as a "Previously Issued Series"); provided that on the date of the occurrence, the outstanding principal amount of at least one Previously Issued Series to which the occurrence relates exceeds $5,000,000, or (7) the Company and the Guarantor pursuant to or within the meaning of any Bankruptcy Law: 26 (A) commences a voluntary case, (B) consents to the entry of an order for relief against it in an involuntary case, (C) consents to the appointment of a Custodian of it or for all or substantially all of its property, or (D) makes a general assignment for the benefit of its creditors; or (8) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that: (A) provides for relief against the Company and the Guarantor in an involuntary case, (B) appoints a Custodian of the Company and the Guarantor for all or substantially all of its property, or (C) orders the liquidation of the Company and the Guarantor and the order or decree remains unstayed and in effect for 90 days; or (9) the Guarantee shall for any reason (other than pursuant to its terms) cease to be in full force and effect. The term "Bankruptcy Law" means Title 11, U.S. Code or any similar Federal or State law for the relief of debtors. The term "Custodian" means any receiver, trustee, assignee, liquidator or similar official under any Bankruptcy Law. A default under clause (3) is not an Event of Default until the Trustee or the Holders of at least 25% in principal amount of the Securities of the Series affected notify the Company of the default and the Company does not cure the default within 60 days after receipt of the notice. The notice must specify the default, demand that it be remedied and state that the notice is a "Notice of Default." Section 8.02 Acceleration. If an Event of Default (other than an Event of Default under Section 8.01(7) or 8.01(8)) on a Series occurs and is continuing, the Trustee by notice to the Company and the Person or Persons designated to receive notices for the Administrative Agent (or other Person acting on behalf of the banks) under the Revolving Credit Agreement and/or the Term Loan Agreement, or the Holders of at least 25% in principal amount of the outstanding Securities of the Series by notice to the Company, the Trustee and such Person or Persons (either such notice is referred to herein as an "Acceleration Notice") may declare the unpaid principal of and accrued and unpaid interest on all the Securities of the Series to be due and payable if, with respect to such Series, (i)(a) no Designated Senior Debt of the Company or the Guarantor is outstanding, or (b) if the Securities of the Series are not subordinated to other indebtedness of the Company, immediately, or (ii) if Designated Senior Debt of the Company or the Guarantor is outstanding and the Securities of the Series are subordinated to other indebtedness of the Company, upon the earlier of (A) ten days after such Acceleration Notice is received by the Company and (B) the acceleration of any Senior Indebtedness of the Company or the Guarantor. If an Event of Default specified in Section 8.01(7) or 8.01(8) occurs, the unpaid principal of and accrued and unpaid interest on the Securities then outstanding shall ipso facto become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Securityholder. The Holders of a majority in principal amount of the Securities of the Series by notice to the Trustee may rescind such declaration or acceleration and its consequences if all existing Events of Default have been cured or waived (except nonpayment of principal or interest that has become due solely because of the acceleration) and if the rescission would not conflict with any judgment or decree. 27 The Company and the Guarantor (i) agree, promptly after execution of this Indenture, to notify the Trustee in writing of the Person or Persons referred to in the first sentence of this Section 8.02 and (ii) agree, promptly after any change thereof, to so notify the Trustee. Any failure by the Trustee or holders of Securities to give an Acceleration Notice to such Person or Persons will not affect the substance or validity of the Acceleration Notice provided that it is otherwise given in accordance with the first paragraph of this Section 8.02. Section 8.03 Other Remedies. If an Event of Default on a Series occurs and is continuing, the Trustee may pursue any available remedy by proceeding at law or in equity to collect the payment of principal or interest on the Series or to enforce the performance of any provisions of the Securities or this Indenture and applicable to the Series. The Trustee may maintain a proceeding even if it does not possess any of the Securities or does not produce any of them in the proceeding. A delay or omission by the Trustee or any Securityholder in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default. No remedy is exclusive of any other remedy. All available remedies are cumulative to the extent permitted by law. Section 8.04 Waiver of Past Defaults. Subject to Section 12.02, the Holders of a majority in principal amount of the Securities of a Series by notice to the Trustee may waive on behalf of all Holders of Securities of the Series an existing Default and its consequences. When a Default is waived, it is cured and stops continuing, but no such waiver shall extend to any subsequent or other Default or impair any right consequent thereon. Section 8.05 Control by Majority. The Holders of a majority in principal amount of the Securities of a Series may direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on it with respect to such Series. However, the Trustee may refuse to follow any direction that conflicts with law or this Indenture, that is unduly prejudicial to the rights of another Securityholder, or that would involve the Trustee in personal liability. Section 8.06 Limitation on Suits. A Securityholder may not pursue any remedy with respect to this Indenture or the Series unless: 28 (1) the Holder gives to the Trustee written notice of a continuing Event of Default; (2) the Holders of at least 25% in principal amount of the Securities of the Series make a written request to the Trustee to pursue the remedy; (3) such Holder or Holders offer to the Trustee indemnity satisfactory to the Trustee against any loss, liability or expense; (4) the Trustee does not comply with the request within 60 days after receipt of the request and the offer of indemnity; and (5) during such 60-day period the Holders of a majority in principal amount of the Securities do not give the Trustee a direction inconsistent with such request. A Securityholder may not use this Indenture to prejudice the rights of another Securityholder or to obtain a preference or priority over another Securityholder. Section 8.07 Rights of Holders To Receive Payment. Notwithstanding any other provisions of this Indenture, the right of any Holder of a Security to receive payment of principal of and interest on the Security, on or after the respective due dates expressed in the Security, or to bring suit for the enforcement of any such payment on or after such respective dates, shall not be impaired or affected without the consent of the Holder. Section 8.08 Collection Suit by Trustee. If an Event of Default in payment of interest or principal specified in Section 8.01(1) or (2) occurs and is continuing, the Trustee may recover judgment in its own name and as trustee of an express trust against the Company, the Guarantor or any other obligor on the Securities for the whole amount of principal and interest remaining unpaid. Section 8.09 Trustee May File Proofs of Claim. The Trustee may file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee and the Securityholders allowed in any judicial proceedings relative to the Company (or any other obligor upon the Securities, including the Guarantor), its creditors or its property. Section 8.10 Priorities. If the Trustee collects any money pursuant to this Article 8, it shall pay out the money in the following order: First: to the Trustee for amounts due under Section 9.07; Second: to the holders of Senior Indebtedness of the Company as required by Article 6 and to the holders of Senior Indebtedness of the Guarantor as required by Article 7; Third: to Securityholders of the Series for amounts due and unpaid on the Securities for principal and interest, ratably, without preference or priority of any kind, according to the amounts due and payable on the Series for principal and interest, respectively; and 29 Fourth: to the Company, or its designee. The Trustee may fix a record date and payment date for any payment to Securityholders. Section 8.11 Undertaking for Costs. In any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as Trustee, a court in its discretion may require the filing by any party litigant in the suit of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including attorneys' fees, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party litigant. This Section does not apply to a suit by the Trustee, a suit by a Holder pursuant to Section 8.07, or a suit by Holders of more than 10% in principal amount of the Securities of the Series. ARTICLE 9. TRUSTEE Section 9.01 Duties of Trustee. (a) If an Event of Default has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by this Indenture and use the same degree of care and skill in its exercise as a prudent man would exercise or use under the circumstances in the conduct of his own affairs. (b) Except during the continuance of an Event of Default: (1) The Trustee need perform only those duties that are specifically set forth in this Indenture and no others. (2) In the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture. However, the Trustee shall examine the certificates and opinions to determine whether or not they conform to the requirements of this Indenture. (c) The Trustee may not be relieved from liability for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that: (1) This paragraph does not limit the effect of paragraph (b) of this Section. (2) The Trustee shall not be liable for any error of judgment made in good faith by a Trust Officer, unless it is proved that the Trustee was negligent in ascertaining the pertinent facts. (3) The Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 8.05. 30 (d) Every provision of this Indenture that in any way relates to the Trustee is subject to paragraphs (a), (b) and (c) of this Section. (e) The Trustee may refuse to perform any duty or exercise any right or power unless it receives indemnity satisfactory to it against any loss, liability or expense. (f) The Trustee shall not be liable for interest on any money received by it except as the Trustee may agree with the Company or the Guarantor, as the case may be. (g) Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law. Section 9.02 Rights of Trustee. Subject to Section 9.01: (a) The Trustee may rely on any document believed by it to be genuine and to have been signed or presented by the proper person. The Trustee need not investigate any fact or matter stated in the document. (b) Before the Trustee acts or refrains from acting, it may require an Officers' Certificate or an Opinion of Counsel. The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on the Certificate or Opinion. (c) The Trustee may act through agents and shall not be responsible for the misconduct or negligence of any agent appointed with due care. (d) The Trustee shall not be liable for any action it takes or omits to take in good faith which it believes to be authorized or within its rights or powers. Section 9.03 Individual Rights of Trustee. The Trustee in its individual or any other capacity may become the owner or pledgee of Securities and may otherwise deal with the Company or its affiliates with the same rights it would have if it were not Trustee. Any Paying Agent, Registrar or co-registrar may do the same with like rights. However, the Trustee must comply with Sections 9.10 and 9.11. Section 9.04 Trustee Disclaimer. The Trustee makes no representation as to the validity or adequacy of this Indenture or the Securities, it shall not be accountable for the Company's use of the proceeds from the Securities, and it shall not be responsible for any statement in the Securities other than its certificate of authentication. Section 9.05 Notice of Defaults. If a Default on a Series occurs and is continuing and if it is known to the Trustee, the Trustee shall mail to each Securityholder notice of the Default within 90 days after it occurs. Except in the case of a default in payment of principal or interest on a Series, the Trustee may withhold the notice if and so long as a committee of its Trust Officers in good faith determines that withholding the notice is in the interests of Securityholders of the Series. Section 9.06 Reports by Trustee to Holders. Within 60 days after each May 15 beginning with the May 15 following the date of this Indenture, the Trustee shall mail to each Securityholder, if required by TIA Section 313(a), a brief report dated as of such May 15 that complies with TIA Section 313(a). The Trustee also shall comply with TIA Section 313(b) and Section 313(c). 31 A copy of each report at the time of its mailing to Securityholders shall be filed with the SEC and each stock exchange on which the Securities are listed. The Company shall notify the Trustee when the Securities have been listed on any securities exchange. Section 9.07 Compensation and Indemnity. The Company and the Guarantor shall pay to the Trustee from time to time reasonable compensation for its services. The Trustee's compensation hereunder shall not be limited by any law on compensation relating to the trustee of an express trust. The Company and the Guarantor shall reimburse the Trustee upon request for all reasonable out-of-pocket expenses incurred by it. Such expenses shall include the reasonable compensation and expenses of the Trustee's agents and counsel. The Company and the Guarantor shall indemnify and hold harmless the Trustee against any loss or liability incurred by it in the acceptance or administration of this trust or the performance of its duties hereunder. The Trustee shall notify the Company and the Guarantor promptly of any claim for which it may seek indemnity. The Company and the Guarantor shall defend the claim and the Trustee shall cooperate in the defense. In the event that counsel to the Trustee shall advise counsel to the Company and the Guarantor that there may be defenses reasonably available to the Trustee different than or additional to those available to the Company and the Guarantor, then in such event the Trustee shall be permitted to employ counsel of its choosing at the expense of the Company and the Guarantor. The Company and the Guarantor need not pay for any settlement made without their consent. The Company and the Guarantor need not reimburse any expense or indemnify against any loss or liability incurred by the Trustee through negligence, bad faith or with willful misconduct. The indemnity contained in this Section 9.07 shall survive the resignation or removal of the Trustee and the termination of this Indenture. To ensure the Company's and the Guarantor's payment obligations in this Section, the Trustee shall have a claim prior to the Securities on all money or property held or collected by the Trustee, except that held in trust to pay principal and interest on particular Securities. When the Trustee incurs expenses or renders services after an Event of Default specified in Section 8.01(7) or (8) occurs, the expenses and the compensation for the services are intended to constitute expenses of administration under any Bankruptcy Law. Section 9.08 Replacement of Trustee. The Trustee may resign by so notifying the Company. The Holders of a majority in principal amount of the Securities may remove the Trustee by so notifying the Trustee to be removed and may appoint a successor Trustee with the Company's and the Guarantor's consent. The Company or the Guarantor may remove the Trustee if: (1) the Trustee fails to comply with Section 9.10; (2) the Trustee is adjudged a bankrupt or an insolvent; (3) a receiver or other public officer takes charge of the Trustee or its property; or 32 (4) the Trustee becomes incapable of acting. If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for any reason, the Company shall promptly appoint a successor Trustee. A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Company. Immediately after that, the retiring Trustee shall transfer all property held by it as Trustee to the successor Trustee (subject to the prior claim provided by Section 9.07). Any resignation or removal of the Trustee and any appointment of a successor Trustee shall become effective upon acceptance of appointment by the successor Trustee. The successor Trustee shall have all the rights, powers and duties of the Trustee under this Indenture. A successor Trustee shall mail notice of its succession to each Securityholder. If a successor Trustee does not take office within 60 days after the retiring Trustee resigns or is removed, the retiring Trustee (at the expense of the Company), the Company or the Holders of a majority in principal amount of the Securities may petition any court of competent jurisdiction for the appointment of a successor Trustee. If the Trustee fails to comply with Section 9.10, any Securityholder may, subject to Section 8.11, petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee. Section 9.09 Successor Trustee by Merger, etc. If the Trustee consolidates with, merges or converts into, or transfers all or substantially all of its corporate trust assets to, another corporation, the resulting, surviving or transferee corporation without any further act shall be the successor Trustee. Section 9.10 Eligibility; Disqualification. This Indenture shall always have a Trustee who satisfies the requirements of TIA Section 310(a)(1). The Trustee shall have a combined capital and surplus of at least $15,000,000 as set forth in the most recent published annual report of condition. The Trustee shall comply with TIA Section 310(b). Section 9.11 Preferential Collection of Claims Against Company. The Trustee shall comply with TIA Section 311(a), excluding any creditor relationship listed in TIA Section 311(b). A Trustee who has resigned or been removed shall be subject to TIA Section 311(a) to the extent indicated. ARTICLE 10. CONVERSION OF SECURITIES Section 10.01 Applicability of Article. Securities of any Series which are convertible into Common Stock at the option of the Holder shall be convertible in accordance with their terms and unless the Authorizing Resolution provides otherwise, in accordance with this Article. Each reference in this Article 10 to "a Security" or "the Securities" refers to the Securities of the particular Series that is convertible into Common Stock. If more than one Series of Securities with conversion privileges are outstanding at any time, the provisions of this Article 10 shall be applied separately to each such Series. 33 Section 10.02 Conversion Privilege. Subject to and upon compliance with the provisions of this Article 10, the Holder of any Security so designated shall have the right, at its, his or her option, at any time prior to the close of business on the date specified in the Securities of such Series (or if such Security or portion thereof is called for redemption prior to such date, then in respect of such Security or portion thereof to and including but not after the close of business on the second day (or, if such day is not a Business Day, then on the next following Business Day) preceding the date fixed for such redemption) to convert the principal amount of any such Security, or any portion of such principal amount which is $1,000 or an integral multiple thereof, into that number of fully paid and non-assessable shares of the Guarantor's Common Stock (calculated as to each conversion to the nearest 1/100th of a share) obtained by dividing the principal amount of the Security or portion thereof to be converted by the Conversion Price and by surrender of the Security so to be converted in whole or in part, such surrender to be made in the manner provided in Section 10.03. Notwithstanding the previous sentence, if the Company shall fail to redeem a Security which has been called for redemption, the Holder of such Security shall retain the right to convert such Security as provided in this Article 10. Section 10.03 Manner of Exercise of Conversion Privilege. In order to exercise a conversion privilege, the Holder of any Security to be converted in whole or in part shall surrender such Security at any of the offices or agencies to be maintained for such purpose by the Company pursuant to Section 2.03, and shall give notice to the Company and the Guarantor in the form provided in the Security, duly executed, at such office or agency that the Holder elects to convert such Security or the portion thereof specified in said notice. Such notice shall also state the name or names, together with the address or addresses, in which the certificate or certificates for shares of Common Stock which shall be issuable on such conversion shall be issued. Each Security surrendered for conversion shall, unless the shares issuable on conversion are to be issued in the same name as the name in which such Security is registered, be accompanied by instruments of transfer, in form satisfactory to the Guarantor, duly executed by the Holder or its, his or her duly authorized attorney. Securities so surrendered during the period from the close of business on a Record Date, or the next preceding Business Day if such Record Date is not a Business Day, preceding any Interest Payment Date to the opening of business on such Interest Payment Date (excluding Securities or portions thereof called for redemption during such period) shall also be accompanied by payment in next-day funds or other funds acceptable to the Guarantor of an amount equal to the interest payable on such Interest Payment Date on the principal amount of such Security then being converted; provided, however, that, if the Company shall default on the payment of said interest, said funds shall be returnable to the payor thereof. As promptly as practicable after the surrender of such Security, as aforesaid, the Guarantor shall issue and shall deliver at such office or agency to such Holder, or on its, his or her written order, a certificate or certificates for the number of full shares of Common Stock issuable upon the conversion of such Security or portion thereof in accordance with the provisions of this Article 10 and any fractional interest in respect of a share of Common Stock arising upon such conversion shall be settled as provided in Section 10.04. In case any Security of a denomination greater than $1,000 shall be surrendered for partial conversion, the Company and the Guarantor shall execute and the Trustee shall authenticate and deliver to or upon the order of the Holder of the Security so surrendered, at the expense of the Company, a new Security or Securities and Guarantee or Guarantees in authorized denominations in an aggregate principal amount equal to the unconverted portion of the surrendered Security. Such conversion shall be deemed to have been effected immediately prior to the close of business on the date on which such Security shall have been surrendered and such notice received by the Company and the Guarantor as aforesaid, and the Person or Persons in whose name or names any certificate or certificates for shares of Common Stock shall be issuable upon such conversion shall be deemed to have become the holder or holders of record of the shares represented thereby at such time and such conversion shall be at the Conversion Price in effect at such time, unless the stock transfer books of the Guarantor shall be closed on that date, in which event such Person or Persons shall be deemed to have become such holder or holders of record at the close of business on the next succeeding day on which such stock transfer books are open, but such conversion shall be at the Conversion Price in effect on the date upon which such Security shall have been surrendered and such notice received by the Company and the Guarantor. Subject to the aforesaid requirement for a payment in the event of conversion after the close of business on a Record Date preceding an Interest Payment Date, no payment or adjustment shall be made on conversion for interest accrued on the Securities surrendered for conversion or for dividends on the Common Stock delivered on such conversion. 34 Section 10.04 Payment in Lieu of Fractional Shares. No fractional shares of Common Stock shall be issued upon conversion of the Securities. Instead of any fractional interest in a share of Common Stock which would otherwise be deliverable upon the conversion of any Security or Securities, the Company and/or the Guarantor shall make an adjustment therefor to the nearest 1/100th of a share in cash at the Current Market Price thereof at the close of business on the Business Day next preceding the day of conversion. If more than one Security shall be surrendered for conversion at one time by the same Holder, the number of full shares issuable upon conversion thereof shall be computed on the basis of the aggregate principal amount of the Securities, or specified portions thereof to be converted, so surrendered. Section 10.05 Adjustment of Conversion Price. The Conversion Price shall be adjusted from time to time as follows: (a) In case the Guarantor shall hereafter (i) pay a dividend or make a distribution on its Common Stock in shares of Common Stock, (ii) subdivide its outstanding shares of Common Stock into a greater number of shares, (iii) combine its outstanding shares of Common Stock into a smaller number of shares, or (iv) issue by reclassification of its Common Stock any shares of Capital Stock of the Guarantor, the Conversion Price in effect immediately prior to such action shall be adjusted so that the Holder of any Security thereafter surrendered for conversion shall be entitled to receive the number of shares of Common Stock or other Capital Stock of the Guarantor which he would have owned immediately following such action had such Security been converted immediately prior thereto. An adjustment made pursuant to this subsection (a) shall become effective immediately after the record date in the case of a dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or reclassification. If, as a result of an adjustment made pursuant to this subsection (a), the Holder of any Security thereafter surrendered for conversion shall become entitled to receive shares of two or more classes of Capital Stock or shares of Common Stock and other Capital Stock of the Guarantor, the Board of Directors (whose determination shall be conclusive and shall be described in a statement filed with the Trustee and with the Registrar) shall determine in an equitable manner the allocation of the adjusted Conversion Price between or among shares of such classes of Capital Stock or shares of Common Stock and other Capital Stock. 35 (b) In case the Guarantor shall hereafter issue rights or warrants to holders of its outstanding shares of Common Stock generally entitling them (for a period expiring within 45 days after the record date mentioned below) to subscribe for or purchase shares of Common Stock at a price per share less than the Current Market Price per share of the Common Stock on the record date mentioned below, the Conversion Price of the shares of Common Stock shall be adjusted so that the same shall equal the price determined by multiplying the Conversion Price in effect immediately prior to the date of issuance of such rights or warrants by a fraction of which the numerator shall be the number of shares of Common Stock outstanding on the date of issuance of such rights or warrants plus the number of shares which the aggregate offering price of the total number of shares so offered would purchase at such Current Market Price, and of which the denominator shall be the number of shares of Common Stock outstanding on the date of issuance of such rights or warrants plus the number of additional shares of Common Stock offered for subscription or purchase. Such adjustment shall become effective immediately after the record date for the determination of shareholders entitled to receive such rights or warrants. (c) In case the Guarantor shall hereafter distribute to holders of its outstanding Common Stock generally evidences of its indebtedness or assets (excluding any cash dividend paid from retained earnings of the Guarantor and dividends or distributions payable in stock for which adjustment is made pursuant to subsection (a) of this Section 10.05) or rights or warrants to subscribe to securities of the Guarantor (excluding those referred to in subsection (b) of this Section 10.05), then in each such case the Conversion Price of the shares of Common Stock shall be adjusted so that the same shall equal the price determined by multiplying the Conversion Price in effect immediately prior to the date of such distribution by a fraction of which the numerator shall be the Current Market Price per share of the Common Stock on the record date mentioned below less the then fair market value (as determined by the Board of Directors, whose determination shall be conclusive and shall be described in a statement filed with the Trustee and with the Registrar) of the portion of the evidences of indebtedness or assets so distributed to the holder of one share of Common Stock or of such subscription rights or warrants applicable to one share of Common Stock, and of which the denominator shall be such Current Market Price per share of Common Stock. Such adjustment shall become effective immediately after the record date for the determination of shareholders entitled to receive such distribution. (d) In any case in which this Section 10.05 shall require that an adjustment be made immediately following a record date, the Guarantor may elect to defer (but only until five Business Days following the filing by the Company with the Trustee and the Registrar of the certificate of independent public accountants described in subsection (f) of this Section 10.05) issuing to the Holder of any Security converted after such record date the shares of Common Stock issuable upon such conversion over and above the shares of Common Stock issuable upon such conversion on the basis of the Conversion Price prior to adjustment. (e) No adjustment in the Conversion Price shall be required unless such adjustment would require an increase or decrease of at least 1% of such price; provided, however, that any adjustments which by reason of this subsection (e) are not required to be made shall be carried forward and taken into account in any subsequent adjustment, and provided further that adjustment shall be required and made in accordance with the provisions of this Article 10 (other than this subsection (e)), not later than such time as may be required in order to preserve the tax-free nature of a distribution to the holders of Securities or Common Stock. All calculations under this Section 10.05 shall be made to the nearest cent or to the nearest 1/100th of a share, as the case may be. Anything in this Section 10.05 to the contrary notwithstanding, the Guarantor shall be entitled to make such reductions in the Conversion Price, in addition to those required by this Section 10.05, as it in its discretion shall determine to be advisable in order that any stock dividend, subdivision of shares, distribution of rights to purchase stock or securities, or distribution of securities convertible into or exchangeable for stock hereafter made by the Guarantor to its shareholders shall not be taxable. 36 (f) Whenever the Conversion Price is adjusted as herein provided, (i) the Company and the Guarantor shall promptly file with the Trustee and the Registrar a certificate of a firm of independent public accountants setting forth the Conversion Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment and the manner of computing the same, which certificate shall be conclusive evidence of the correctness of such adjustment and (ii) a notice stating that the Conversion Price has been adjusted and setting forth the adjusted Conversion Price shall forthwith be given by the Company and the Guarantor to the Holders in the manner provided in Section 13.02. Subject to TIA Section 315(a), (c) and (d), the Trustee and any conversion agent shall be under no duty or responsibility with respect to any such certificate or the certificate provided for in Section 10.10 except to exhibit the same from time to time to any Holder of a Security desiring an inspection of such certificate. (g) In the event that at any time as a result of an adjustment made pursuant to subsection (a) of this Section 10.05, the Holder of any Security thereafter surrendered for conversion shall become entitled to receive any shares of the Guarantor other than shares of Common Stock, thereafter the Conversion Price of such other shares so receivable upon conversion of any Security shall be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to Common Stock contained in this Article 10. Section 10.06 Notice of Certain Corporate Action. In the event: (a) the Guarantor shall take any action which would require an adjustment in the Conversion Price pursuant to Section 10.05(c); or (b) the Guarantor shall authorize the granting to the holders of its Common Stock (as a class) of rights or warrants to subscribe for or purchase any shares of stock of any class or of any other rights; or (c) there shall be any capital reorganization or reclassification of the Common Stock (other than a subdivision or combination of the outstanding Common Stock and other than a change in the par value of the Common Stock), or any consolidation or merger to which the Guarantor is a party or any statutory exchange of securities with another corporation and for which approval of any shareholders of the Guarantor is required, or any sale or transfer of all or substantially all of the assets of the Guarantor; or 37 (d) there shall be a voluntary or involuntary dissolution, liquidation or winding-up of the Guarantor; then the Company and the Guarantor shall cause to be filed with the Trustee and the Registrar, and shall cause to be given to the Holders, in the manner provided in Section 13.02, at least 14 days prior to the applicable date hereinafter specified, a notice stating (i) the date on which a record is to be taken for the purpose of such distribution or rights, or, if a record is not to be taken, the date as of which the holders of Common Stock of record to be entitled to such distribution or rights are to be determined, or (ii) the date on which such reorganization, reclassification, consolidation, merger, sale, transfer, dissolution, liquidation or winding-up is expected to become effective, and the date as of which it is expected that holders of Common Stock of record shall be entitled to exchange their shares of Common Stock for securities or other property deliverable upon such reorganization, reclassification, consolidation, merger, sale, transfer, dissolution, liquidation or winding-up. Failure to give such notice or any defect therein shall not affect the legality or validity of the proceedings described in subsection (a), (b), (c) or (d) of this Section 10.06. Section 10.07 Guarantor To Provide Stock. The Guarantor covenants that it will at all times reserve and keep available, free from preemptive rights, out of the aggregate of its authorized but unissued shares of Common Stock or its issued shares of Common Stock held in its treasury, or both, for the purpose of effecting conversions of Securities, the full number of shares of Common Stock deliverable upon the conversion of all outstanding Securities not theretofore converted. For purposes of this Section 10.07, the number of shares of Common Stock which shall be deliverable upon the conversion of all outstanding Securities shall be computed as if at the time of computation all outstanding Securities were held by a single Holder. Before taking any action which would cause an adjustment reducing the Conversion Price below the then par value (if any) of the shares of Common Stock deliverable upon conversions of the Securities, the Guarantor will take any corporate action which may, in the opinion of its counsel, be necessary in order that the Guarantor may validly and legally issue fully paid and non-assessable shares of Common Stock at such adjusted Conversion Price. The Guarantor will endeavor to list the shares of Common Stock required to be delivered upon conversion of Securities prior to such delivery upon each national securities exchange, if any, upon which the outstanding Common Stock is listed at the time of such delivery. Prior to the delivery of any securities which the Guarantor shall be obligated to deliver upon conversion of the Securities, the Guarantor will endeavor to comply with all federal and state laws and regulations thereunder requiring the registration of such securities with, or any approval of or consent to the delivery thereof by, any governmental authority. Section 10.08 Taxes on Conversions. The Company and/or the Guarantor will pay any and all documentary stamp or similar issue or transfer taxes payable in respect of the issue or delivery of shares of Common Stock on conversions of Securities pursuant hereto; provided, however, that neither the Company nor the Guarantor shall be required to pay any tax which may be payable in respect of any transfer involved in the issue or delivery of shares of Common Stock in a name other than that of the Holder of the Securities to be converted and no such issue or delivery shall be made unless and until the person requesting such issue or delivery has paid to the Company and/or the Guarantor the amount of any such tax or has established, to the satisfaction of the Company and the Guarantor, that such tax has been paid. 38 Section 10.09 Covenant as to Stock. The Guarantor covenants that all shares of Common Stock which may be delivered upon conversions of Securities will upon delivery be duly and validly issued and fully paid and non-assessable, free of all liens and charges and not subject to any preemptive rights. Section 10.10 Consolidation or Merger. Notwithstanding any other provision herein to the contrary, in case of any consolidation or merger to which the Guarantor is a party other than a merger or consolidation in which the Guarantor is the continuing corporation, or in case of any sale or conveyance to another corporation of the property of the Guarantor as an entirety or substantially as an entirety, or in the case of any statutory exchange of securities with another corporation (including any exchange effected in connection with a merger of a third corporation into the Guarantor), there shall be no adjustments under Section 10.05 but the Holder of each Security then outstanding shall have the right thereafter to convert such Security into the kind and amount of securities, cash or other property which he would have owned or have been entitled to receive immediately after such consolidation, merger, statutory exchange, sale or conveyance had such Security been converted immediately prior to the effective date of such consolidation, merger, statutory exchange, sale or conveyance and in any such case, if necessary, appropriate adjustment shall be made in the application of the provisions set forth in this Article 10 with respect to the rights and interests thereafter of the Holders of the Securities, to the end that the provisions set forth in this Article 10 shall thereafter correspondingly be made applicable, as nearly as may reasonably be, in relation to any shares of stock or other securities or property thereafter deliverable on the conversion of the Securities. Any such adjustment shall be made by and set forth in a supplemental indenture executed by the Company, the Guarantor and the Trustee and approved by a firm of independent public accountants, evidenced by a certificate to that effect; and any adjustment so approved shall for all purposes hereof conclusively be deemed to be an appropriate adjustment. The above provisions of this Section 10.10 shall similarly apply to successive consolidations, mergers, statutory exchanges, sales or conveyances. The Company shall give notice of the execution of such a supplemental indenture to the Holders of Securities in the manner provided in Section 13.02 within 30 days after the execution thereof. The Trustee shall not be under any responsibility to determine the correctness of any provisions contained in such supplemental indenture relating either to the kind or amount of shares of stock or securities or property receivable by Holders upon the conversion of their Securities after any such consolidation, merger, statutory exchange, sale or conveyance, or to any adjustment to be made with respect thereto. 39 Section 10.11 Disclaimer of Responsibility for Certain Matters. Neither the Trustee nor the Registrar shall at any time be under any duty or responsibility to any Holder of Securities to determine whether any facts exist which may require any adjustment of the Conversion Price, or with respect to the nature or extent of any such adjustment when made, or with respect to the method employed, or herein or in any supplemental indenture provided to be employed, in making the same. Neither the Trustee nor the Registrar shall be accountable with respect to the listing or registration referred to in Section 10.07 or the validity or value (or the kind or amount) of any shares of Common Stock, or of any securities or property, which may at any time be issued or delivered upon the conversion of any Security; and neither the Trustee nor the Registrar makes any representation with respect thereto. Neither the Trustee nor the Registrar shall be responsible for any failure of the Guarantor to issue, transfer or deliver any shares of Common Stock or stock certificates or other securities or property or to make any cash payment upon the surrender of any Security for the purpose of conversion or, subject to TIA Section 315(a), (c) and (d), to comply with any of the covenants contained in this Article 10. ARTICLE 11. DISCHARGE OF INDENTURE Section 11.01 Termination of the Company's and the Guarantor's Obligations. Securities of a Series may be defeased in accordance with their terms and, unless the Authorizing Resolution provides otherwise, in accordance with this Article. The Company may terminate all of its obligations under the Securities of a Series and this Indenture, to the extent its obligations under this Indenture relate to that Series, and the obligations of the Guarantor shall terminate if all Securities of a Series previously authenticated and delivered (other than destroyed, lost or stolen Securities which have been replaced or paid) have been delivered to the Trustee for cancellation or if: (1) the Securities mature within one year or all of them are to be called for redemption within one year under arrangements satisfactory to the Trustee for giving the notice of redemption; and (2) the Company irrevocably deposits in trust with the Trustee money sufficient to pay principal of and interest on the outstanding Securities to maturity or redemption, as the case may be. The Company may make the deposit only if Article 6 permits it. Immediately after making the deposit, the Company shall give notice of such event and proposed date of payment to each Securityholder. The Company's obligations and, to the extent applicable, the Guarantor's obligations, in Sections 2.05, 2.06, 2.07, 2.08, 2.09, 4.01, 9.07, 9.08 and 11.03 and Article 10, however, shall survive until the Securities are no longer outstanding. Thereafter, the Company's obligations and, to the extent applicable, the Guarantor's obligations, in Sections 9.07 and 11.03 shall survive. After a deposit, the Trustee upon request shall acknowledge in writing the discharge of the Company's obligations under the Securities, the Guarantor's obligations under the Guarantee and their obligations under the Indenture except for those surviving obligations specified above. 40 Section 11.02 Application of Trust Money. The Trustee shall hold in trust money deposited with it pursuant to Section 11.01. It shall apply the deposited money through the Paying Agent and in accordance with this Indenture to the payment of principal and interest on the Securities. Section 11.03 Repayment to Company. The Trustee and the Paying Agent shall promptly pay to the Company upon request any excess money held by them at any time. The Trustee and the Paying Agent shall pay to the Company upon request any money held by them for the payment of principal or interest (including interest, if any, earned on such money) that remains unclaimed for two years; provided, however, that the Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of the Company cause to be published once in a newspaper of general circulation in The City of New York or mail to each Holder notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such publication or mailing, any unclaimed balance of such money then remaining will be repaid to the Company. After payment to the Company, Securityholders entitled to any of such money must look to the Company or, if applicable, the Guarantor for payment as general creditors unless applicable abandoned property law designates another person and all liability of the Trustee or Paying Agent with respect to such money shall thereupon cease. ARTICLE 12. AMENDMENTS, SUPPLEMENTS AND WAIVERS Section 12.01 Without Consent of Holders. The Company may amend or supplement this Indenture or the Securities without notice to or consent of any Securityholder: (1) to cure any ambiguity, defect or inconsistency; (2) to comply with Section 5.01; (3) to provide for uncertificated Securities in addition to or in place of certificated Securities; or (4) to make any change that does not adversely affect the rights of any Securityholder. Section 12.02 With Consent of Holders. The Company may amend or supplement this Indenture or the Securities without notice to any Securityholder but with the written consent of the Holders of at least a majority in principal amount of the Securities of all Series affected by the amendment voting as a class. The Holders of a majority in principal amount of the Securities may waive compliance by the Company with any provision of this Indenture or the Securities without notice to any Securityholder. However, without the consent of each Securityholder affected, an amendment, supplement or waiver, including a waiver pursuant to Section 8.04, may not: (1) reduce the amount of Securities whose Holders must consent to an amendment, supplement or waiver; 41 (2) reduce the rate of or extend the time for payment of interest on any Security; (3) reduce the principal of or extend the fixed maturity of any Security or alter the redemption provisions with respect thereto; (4) waive a default in the payment of the principal of or interest on any Security; (5) modify the provisions of Article 6 (subordination) or Article 7 (guarantee) in a manner adverse to the Holders; (6) make any security payable in money other than that stated in the Security; (7) if applicable, make any change that adversely affects the right to convert or the Conversion Price for any Security; or (8) make any change in Section 8.04 or 8.07 or this Section 12.02. After an amendment under this Section 12.02 becomes effective, the Company shall mail to the Holders a notice briefly describing the amendment. Section 12.03 Compliance with Trust Indenture Act. Every amendment to or supplement of this Indenture or the Securities shall comply with the TIA as then in effect. Section 12.04 Revocation and Effect of Consents. A consent to an amendment, supplement or waiver by a Holder of a Security shall bind the Holder and every subsequent Holder of a Security or portion of a Security that evidences the same debt as the consenting Holder's Security, even if notation of the consent is not made on any Security. However, any such Holder or subsequent Holder may revoke the consent as to the Security or portion of a Security of such Holder. The Trustee must receive the notice of revocation before the date the amendment, supplement or waiver becomes effective. After an amendment, supplement or waiver becomes effective, it shall bind every Securityholder unless it makes a change described in clauses (1) through (8) of Section 12.02. In that case the amendment, supplement or waiver shall bind each Holder of a Security who has consented to it and every subsequent Holder of a Security or portion of a Security that evidences the same debt as the consenting Holder's Security. Section 12.05 Notation on or Exchange of Securities. If an amendment, supplement or waiver changes the terms of a Security, the Trustee may require the Holder of the Security to deliver it to the Trustee. The Trustee may place an appropriate notation on the Security about the changed terms and return it to the Holder. Alternatively, if the Company or the Trustee so determine, the Company in exchange for the Security shall issue and the Trustee shall authenticate, a new Security that reflects the changed terms. 42 Section 12.06 Trustee To Sign Amendments, etc. The Trustee shall sign any amendment, supplement or waiver authorized pursuant to this Article if the amendment, supplement or waiver does not adversely affect the rights or duties of the Trustee. If it does, the Trustee may but need not sign it. In signing any amendment, supplement or waiver, the trustee may rely on an Opinion of Counsel which shall state that such amendment, supplement or waiver is permitted under this Article 12. ARTICLE 13. MISCELLANEOUS Section 13.01 Trust Indenture Act Controls. If any provision of this Indenture limits, qualifies, or conflicts with another provision which is required to be included in this Indenture by the TIA or the TIA as amended after the date hereof, the required provision shall control. Section 13.02 Notices. Any notice or communication shall be sufficiently given if in writing and delivered in person or mailed by first-class mail addressed as follows: if to the Company or the Guarantor: Toll Brothers, Inc., 3103 Philmont Avenue, Huntingdon Valley, Pennsylvania 19006 Attention: Chief Financial Officer with a copy to: Mark K. Kessler, Esquire Wolf, Block, Schorr and Solis-Cohen LLP 1650 Arch Street, 22nd Floor Philadelphia, PA 19103-2097 if to the Trustee: Bank One Trust Company, NA 1111 Polaris Parkway, Suite 1K Columbus, OH 43420 Attention: Corporate Trust Securities Division The Company, the Guarantor or the Trustee by notice to the other may designate additional or different addresses for subsequent notices or communications. Any notice or communication mailed to a Securityholder shall be mailed to him at his address as it appears on the registration books of the Registrar and shall be sufficiently given to him if so mailed within the time prescribed. In addition, a copy of each such notice or communication shall be mailed to the Trustee at the address specified above. Failure to mail a notice or communication to a Securityholder or any defect in it shall not affect its sufficiency with respect to other Securityholders. If a notice or communication is mailed in the manner provided above, it is duly given, whether or not the addressee receives it. If the Company or the Guarantor mails a notice or communication to Securityholders, it shall mail a copy of such notice to the Trustee and each agent at the same time. 43 Section 13.03 Communication by Holders with Other Holders. Securityholders may communicate pursuant to TIA Section 312(b) with other Securityholders with respect to their rights under this Indenture or the Securities. The Company, the Guarantor, the Trustee, the Registrar and anyone else shall have the protection of TIA Section 312(c). Section 13.04 Certificate and Opinion as to Conditions Precedent. Upon any request or application by the Company to the Trustee to take any action under this Indenture, the Company shall furnish to the Trustee: (1) an Officers' Certificate stating that, in the opinion of the signers, all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with; and (2) an Opinion of Counsel stating that, in the opinion of such counsel, all such conditions precedent have been complied with. Section 13.05 Statements Required in Certificate or Opinion. Each certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture shall include: (1) a statement that the person making such certificate or opinion has read such covenant or condition; (2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (3) a statement that, in the opinion of such person, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and (4) a statement as to whether or not, in the opinion of such person, such condition or covenant has been complied with. Section 13.06 When Treasury Securities Disregarded. In determining whether the Holders of the required principal amount of Securities of a Series have concurred in any direction, waiver or consent, Securities of the Series owned by the Company or the Guarantor or by any person directly or indirectly controlling or controlled by or under direct or indirect common control with the Company or the guarantor shall be disregarded, except that for the purposes of determining whether the Trustee shall be protected in relying on any such direction, waiver or consent, only Securities of the Series which the Trustee knows are so owned shall be so disregarded. 44 Section 13.07 Rules by Trustee, Paying Agent, Registrar. The Trustee may make reasonable rules for action by or a meeting of Securityholders. The Paying Agent or Registrar each may make reasonable rules for its functions. Section 13.08 Legal Holidays. A "Legal Holiday" is a Saturday, a Sunday, a legal holiday or a day on which banking institutions are not required to be open. If a payment date is a Legal Holiday at a place of payment, payment may be made at that place on the next succeeding day that is not a Legal Holiday, and no interest shall accrue for the intervening period. Section 13.09 Governing Law. The laws of the State of New York shall govern this Indenture, the Securities and the Guarantee without regard to principles of conflicts of law. Section 13.10 No Adverse Interpretation of Other Agreements. This Indenture may not be used to interpret another indenture, loan or debt agreement of the Company, the Guarantor or a Subsidiary. Any such indenture, loan or debt agreement may not be used to interpret this Indenture. Section 13.11 No Recourse Against Others. All liability described in paragraph 20 of the Securities of any director, officer, employee or shareholder, as such, of the Company or the Guarantor is waived and released. Section 13.12 Successors. All agreements of the Company or the Guarantor in this Indenture and the Securities shall bind its successor. All agreements of the Trustee in this Indenture shall bind its successor. Section 13.13 Duplicate Originals. The parties may sign any number of copies of this Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. Section 13.14 Counterparts. This Indenture may be executed in any number of counterparts, all of which shall together constitute one and the same instrument. This Indenture shall become binding when one or more counterparts hereof, individually or taken together, shall bear the signatures of all of the parties reflected hereon as the signatories. 45 SIGNATURES Dated: TOLL CORP., as Issuer By: ------------------------------ Name: (SEAL) Title: Attest: - -------------------------------- Name: Title: Dated: TOLL BROTHERS, INC., as Guarantor By: ------------------------------ Name: (SEAL) Title: Attest: - -------------------------------- Name: Title: Dated: BANK ONE TRUST COMPANY, NA, as Trustee By: ------------------------------ Name: (SEAL) Title: Attest: - -------------------------------- Name: Title: S-1 EX-4.2 4 b317330_ex4-2.txt EXHIBIT 4.2 EXHIBIT 4.2 FIRST HUNTINGDON FINANCE CORP., as Issuer TOLL BROTHERS, INC., as Guarantor Debt Securities Indenture Dated as of ___________________ BANK ONE TRUST COMPANY, NA, as Trustee CROSS-REFERENCE TABLE TIA Indenture Section Section - ------- ------- 310(a)(1)................................................. 9.10 (a)(2).................................................... 9.10 (a)(3).................................................... N.A. (a)(4).................................................... N.A. (b)....................................................... 9.08; 9.10; 13.02 (c)....................................................... N.A. 311(a).................................................... 9.11 (b)....................................................... 9.11 (c)....................................................... N.A. 312(a).................................................... 2.07 (b)....................................................... 13.03 (c)....................................................... 13.03 313(a).................................................... 9.06 (b)(1).................................................... N.A. (b)(2).................................................... 9.06 (c)....................................................... 9.06; 13.02 (d)....................................................... 9.06 314(a).................................................... 4.03; 13.02 (b)....................................................... N.A. (c)(1).................................................... 13.04 (c)(2).................................................... 13.04 (c)(3).................................................... N.A. (d)....................................................... N.A. (e)....................................................... 13.05 (f)....................................................... N.A. 315(a).................................................... 9.01(b) (b)....................................................... 9.05; 13.02 (c)....................................................... 9.01(a) (d)....................................................... 9.01(c) (e)....................................................... 8.11 316(a)(last sentence)..................................... 13.06 (a)(1)(A)................................................. 8.05 (a)(1)(B)................................................. 8.04 (a)(2).................................................... N.A. (b)....................................................... 8.07 317(a)(1)................................................. 8.08 (a)(2).................................................... 8.09 (b)....................................................... 2.06 318(a).................................................... 13.01 N.A. means Not Applicable. Note: This cross-reference table shall not, for any purpose, be deemed to be a part of the Indenture. TABLE OF CONTENTS Page ARTICLE 1. DEFINITIONS AND INCORPORATION BY REFERENCE Section 1.01 Definitions....................................................1 Section 1.02 Incorporation by Reference of Trust Indenture Act..............5 Section 1.03 Incorporation by Reference of Provisions of Securities.........6 Section 1.04 Rules of Construction..........................................6 ARTICLE 2. THE SECURITIES Section 2.01 Forms Generally................................................6 Section 2.02 Form of Trustee's Certificate of Authentication................7 Section 2.03 Amount Unlimited, Issuable in Series...........................7 Section 2.04 Execution and Authentication...................................8 Section 2.05 Registrar and Paying Agent.....................................9 Section 2.06 Paying Agent To Hold Money in Trust............................9 Section 2.07 Securityholder Lists..........................................10 Section 2.08 Transfer and Exchange.........................................10 Section 2.09 Replacement Securities........................................10 Section 2.10 Outstanding Securities........................................10 Section 2.11 Temporary Securities..........................................11 Section 2.12 Cancellation..................................................11 Section 2.13 Defaulted Interest............................................11 Section 2.14 Global Securities.............................................12 ARTICLE 3. REDEMPTION Section 3.01 Notices to Trustee............................................12 Section 3.02 Selection of Securities To Be Redeemed........................13 Section 3.03 Notice of Redemption..........................................13 Section 3.04 Effect of Notice of Redemption................................13 Section 3.05 Deposit of Redemption Price...................................14 Section 3.06 Securities Redeemed in Part...................................14 -i- ARTICLE 4. COVENANTS Section 4.01 Payment of Securities.........................................14 Section 4.02 SEC Reports...................................................14 Section 4.03 Compliance Certificate........................................14 ARTICLE 5. SUCCESSOR CORPORATION Section 5.01 When the Company and the Guarantor May Merge, etc.............15 ARTICLE 6. SUBORDINATION Section 6.01 Agreement To Subordinate......................................15 Section 6.02 Company Not To Make Payments with Respect to Securities in Certain Circumstances.........................................15 Section 6.03 Securities Subordinated to Prior Payment of All Senior Indebtedness of the Company on Dissolution, Liquidation or Reorganization of the Company.................................16 Section 6.04 Securityholders To Be Subrogated to Rights of Holders of Senior Indebtedness of the Company............................17 Section 6.05 Obligation of the Company Unconditional.......................17 Section 6.06 Knowledge of Trustee..........................................18 Section 6.07 Application by Trustee of Monies Deposited With It............18 Section 6.08 Subordination Rights Not Impaired by Acts or Omissions of Company or Holders of Senior Indebtedness of the Company......18 Section 6.09 Securityholders Authorize Trustee To Effectuate Subordination of Securities...................................19 Section 6.10 Right of Trustee To Hold Senior Indebtedness of the Company...19 Section 6.11 Article Six Not To Prevent Events of Default..................19 ARTICLE 7. GUARANTEE Section 7.01 Guarantee.....................................................19 Section 7.02 Agreement To Subordinate......................................20 Section 7.03 Guarantor Not To Make Payments with Respect to Securities in Certain Circumstances......................................21 Section 7.04 Guarantee Subordinated to Prior Payment of All Senior Indebtedness of the Guarantor on Dissolution, Liquidation or Reorganization of the Guarantor............................22 -ii- Section 7.05 Securityholders To Be Subrogated to Rights of Holders of Senior Indebtedness of the Guarantor..........................23 Section 7.06 Obligation of the Guarantor Unconditional.....................23 Section 7.07 Knowledge of Trustee..........................................24 Section 7.08 Application by Trustee of Monies Deposited With It............24 Section 7.09 Subordination Rights Not Impaired by Acts or Omissions of Guarantor or Holders of Senior Indebtedness of the Guarantor..24 Section 7.10 Securityholders Authorize Trustee To Effectuate Subordination of Guarantee....................................24 Section 7.11 Right of Trustee To Hold Senior Indebtedness of the Guarantor.................................................25 Section 7.12 Article 7 Not To Prevent Events of Default....................25 Section 7.13 Execution and Delivery of Guarantee...........................25 Section 7.14 Subordination of Indebtedness Owed by the Company to the Guarantor.................................................25 Section 7.15 Officers' Certificate.........................................25 ARTICLE 8. DEFAULTS AND REMEDIES Section 8.01 Events of Default.............................................26 Section 8.02 Acceleration..................................................27 Section 8.03 Other Remedies................................................28 Section 8.04 Waiver of Past Defaults.......................................28 Section 8.05 Control by Majority...........................................28 Section 8.06 Limitation on Suits...........................................28 Section 8.07 Rights of Holders To Receive Payment..........................29 Section 8.08 Collection Suit by Trustee....................................29 Section 8.09 Trustee May File Proofs of Claim..............................29 Section 8.10 Priorities....................................................29 Section 8.11 Undertaking for Costs.........................................30 ARTICLE 9. TRUSTEE Section 9.01 Duties of Trustee.............................................30 Section 9.02 Rights of Trustee.............................................31 Section 9.03 Individual Rights of Trustee..................................31 Section 9.04 Trustee Disclaimer............................................31 Section 9.05 Notice of Defaults............................................31 Section 9.06 Reports by Trustee to Holders.................................31 Section 9.07 Compensation and Indemnity....................................32 Section 9.08 Replacement of Trustee........................................32 Section 9.09 Successor Trustee by Merger, etc..............................33 Section 9.10 Eligibility; Disqualification.................................33 Section 9.11 Preferential Collection of Claims Against Company.............33 -iii- ARTICLE 10. CONVERSION OF SECURITIES Section 10.01 Applicability of Article......................................33 Section 10.02 Conversion Privilege..........................................34 Section 10.03 Manner of Exercise of Conversion Privilege....................34 Section 10.04 Payment in Lieu of Fractional Shares..........................35 Section 10.05 Adjustment of Conversion Price................................35 Section 10.06 Notice of Certain Corporate Action............................37 Section 10.07 Guarantor To Provide Stock....................................38 Section 10.08 Taxes on Conversions..........................................38 Section 10.09 Covenant as to Stock..........................................39 Section 10.10 Consolidation or Merger.......................................39 Section 10.11 Disclaimer of Responsibility for Certain Matters..............39 ARTICLE 11. DISCHARGE OF INDENTURE Section 11.01 Termination of the Company's and the Guarantor's Obligations..40 Section 11.02 Application of Trust Money....................................41 Section 11.03 Repayment to Company..........................................41 ARTICLE 12. AMENDMENTS, SUPPLEMENTS AND WAIVERS Section 12.01 Without Consent of Holders....................................41 Section 12.02 With Consent of Holders.......................................41 Section 12.03 Compliance with Trust Indenture Act...........................42 Section 12.04 Revocation and Effect of Consents.............................42 Section 12.05 Notation on or Exchange of Securities.........................42 Section 12.06 Trustee To Sign Amendments, etc...............................43 ARTICLE 13. MISCELLANEOUS Section 13.01 Trust Indenture Act Controls..................................43 Section 13.02 Notices.......................................................43 Section 13.03 Communication by Holders with Other Holders...................44 Section 13.04 Certificate and Opinion as to Conditions Precedent............44 Section 13.05 Statements Required in Certificate or Opinion.................44 Section 13.06 When Treasury Securities Disregarded..........................44 Section 13.07 Rules by Trustee, Paying Agent, Registrar.....................45 Section 13.08 Legal Holidays................................................45 -iv- Section 13.09 Governing Law.................................................45 Section 13.10 No Adverse Interpretation of Other Agreements.................45 Section 13.11 No Recourse Against Others....................................45 Section 13.12 Successors....................................................45 Section 13.13 Duplicate Originals...........................................45 Section 13.14 Counterparts..................................................45 SIGNATURES...................................................................S-1 -v- INDENTURE dated as of ____________________ among FIRST HUNTINGDON FINANCE CORP., a Delaware corporation (the "Company"), TOLL BROTHERS, INC., a Delaware corporation (the "Guarantor"), and BANK ONE TRUST COMPANY, NA, a national banking association (the "Trustee"). The Company has duly authorized the execution and delivery of this Indenture to provide for the issuance from time to time of its bonds, debentures, notes and/or other evidences of indebtedness (herein called the "Securities"), which may be senior secured, senior unsecured, senior subordinated or subordinated, to be issued in one or more series as in this Indenture provided. The Guarantor has duly authorized the execution and delivery of this Indenture to provide for the issuance from time to time of its unconditional guarantee of the Securities (herein called the "Guarantee"), which may be senior secured, senior unsecured, senior subordinated or subordinated, as in this Indenture provided. For and in consideration of the premises and the purchase of the Securities by the Holders thereof, it is mutually covenanted and agreed, for the equal and ratable benefit of the Holders of the Securities or of each series thereof as follows: ARTICLE 1. DEFINITIONS AND INCORPORATION BY REFERENCE Section 1.01 Definitions. "Acceleration Notice" has the meaning provided in Section 8.02. "Affiliate" has the meaning provided in Rule 405 promulgated under the Securities Act of 1933, as amended and in effect on the date hereof. "Authorizing Resolution" means a resolution adopted by the Board of Directors or by an Officer or committee of Officers pursuant to Board delegation authorizing a Series of Securities. An Authorizing Resolution shall be so adopted by both the Company and the Guarantor. "Bankruptcy Law" has the meaning provided in Section 8.01. "Board of Directors" means the Board of Directors of the Company or the Guarantor, as the case may be, or any authorized committee of the Board. "Board Resolution" means a copy of a resolution certified by the Secretary or an Assistant Secretary of the Company or the Guarantor, as the case may be, to have been duly adopted by the Board of Directors and to be in full force and effect on the date of such certification and delivered to the Trustee. "Business Day" means a day that is not a Legal Holiday. "Capital Stock" means the classes of capital stock of a Person as they exist on the date of this Indenture or as they may be constituted from time to time and warrants, options and similar rights to acquire such capital stock. "Common Stock" means the Common Stock ($.01 par value) of the Guarantor as the same exists at the date of this Indenture as originally executed or as such stock may be constituted from time to time. "Company" means the party named as such in this Indenture until a successor replaces it and thereafter means the successor or any other obligor on the Securities. "Company" shall also mean the Guarantor in the event the Company fails to perform those duties required by Sections 312 through 317 of the TIA. "Consolidated Net Worth" of any Person means the consolidated stockholders' equity of such Person, as determined in accordance with generally accepted accounting principles. "Conversion Price" means the initial conversion price of Securities of a Series specified in the Authorizing Resolution establishing the terms of such Series Security, as adjusted in accordance with the provisions of Article 10. "Current Market Price" for any relevant date means, (a) except for purposes of Section 10.04, the average of the last reported sale prices of the Common Stock for the 30 consecutive Business Days commencing 45 Business Days before the day in question and (b) for purposes of Section 10.04 only, the last reported sale price of the Common Stock, in either such case as reported on the composite tape, or similar reporting system, for issues listed on the New York Stock Exchange (or if the Common Stock is not then listed on that exchange, for issues listed on such other national securities exchange upon which the Common Stock is listed as may be designated by the Board of Directors for the purposes hereof) or, if there is no such reported sale on the day or days in question, on the basis of the average of the closing bid and asked quotations as so reported, or, if the Common Stock is not listed on any national securities exchange, on the basis of the average of the high bid and low asked quotations on the day or days in question in the over-the-counter market as reported by the National Association of Securities Dealers' Automated Quotations System, or if not so quoted, as reported by National Quotation Bureau, Incorporated, or any similar organization, or if not so reported as determined in good faith by the Board. "Default" means any event which is, or after notice or passage of time or both would be, an Event of Default. "Designated Senior Debt of the Company" means any single issue of indebtedness of the Company constituting Senior Indebtedness of the Company which at the time of determination has an aggregate principal amount outstanding of at least $25,000,000 and is specifically designated in the instrument or instruments creating, governing or evidencing such Senior Indebtedness of the Company as "Designated Senior Debt of First Huntingdon Finance 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). 2 "Designated Senior Debt of the Guarantor" means any single issue of indebtedness of the Guarantor constituting Senior Indebtedness of the Guarantor which at the time of determination has an aggregate principal amount outstanding of at least $25,000,000 and is specifically designated in the instrument or instruments creating, governing or evidencing such Senior Indebtedness of the Guarantor as "Designated Senior Debt of Toll Brothers, Inc." (it being understood that the Guarantor's guarantee of the Revolving Credit Agreement shall be considered a single issue of indebtedness of the Guarantor for purposes of this definition). "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Event of Default" has the meaning provided in Section 8.01. "Guarantee" has the meaning provided in Section 7.01. "Guarantor" means the party named as such in this Indenture until a successor replaces it and thereafter means the successor. "Holder" or "Securityholder" means the Person in whose name a Security is registered on the Registrar's books. "Indenture" means this Indenture as amended or supplemented from time to time. "Interest Payment Date," when used with respect to any installment of interest payable on the Securities, has the meaning provided in Section 1 of the Securities. "Legal Holiday" has the meaning provided in Section 13.08. "Non-Recourse Indebtedness" means indebtedness or other obligations secured by a lien on property to the extent that the liability for such indebtedness or other obligations is limited to the security of the property without liability on the part of the Guarantor or any Subsidiary (other than the Subsidiary which holds title to such property) for any deficiency. "Non-Recourse Judgment" means a judgment in respect of indebtedness or other obligations secured by a lien on property to the extent that the liability for (i) such indebtedness or other obligations and (ii) such judgment is limited to such property without liability on the part of the Guarantor or any Subsidiary (other than the Subsidiary which holds title to such property) for any deficiency. "Officer" means the Chairman of the Board, the President, any Vice President, the Chief Accounting Officer, the Controller, the Treasurer or the Secretary of the Company or the Guarantor, as the case may be. "Officers' Certificate" means a certificate signed by the Chairman of the Board, the President or any Vice President, and by the Chief Accounting Officer, the Controller, the Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary of the Company or the Guarantor, as the case may be. See Sections 13.04 and 13.05. 3 "Opinion of Counsel" means a written opinion from legal counsel who is acceptable to the Trustee. The counsel may be counsel to, but not an employee of, the Company or the Guarantor. See Sections 13.04 and 13.05. "Original Issue Discount Security" means any Security which provides that an amount less than its principal amount is due and payable upon acceleration after an Event of Default. "Paying Agent" has the meaning provided in Section 2.05. "Person" means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization or government or other agency or political subdivision thereof. "Principal" of a debt security means the principal of the security plus the premium, if any, on the security. "Record Date" for the interest payable on any Interest Payment Date on the Securities has the meaning provided in Section 1 of the Securities. "Registrar" has the meaning provided in Section 2.05. "Restricted Subsidiary," if applicable, has the meaning provided in the Authorizing Resolution. "Revolving Credit Agreement" means the Amended and Restated Credit Agreement dated as of May 18, 2001 among First Huntingdon Finance Corp., Toll Brothers, Inc., certain lenders and Bank One, NA, as Administrative Agent, together with all other agreements, instruments and documents executed or delivered pursuant thereto or in connection therewith (including, without limitation, any guarantee agreements and security documents), in each case as such ageements, instruments or documents may be amended (including any amendment and restatement thereof), supplemented, extended, renewed, refinanced, replaced, increased, restructured or otherwise modified from time to time (including (i) through execution of a new facility with one or more different lenders or (ii) through increasing the amount of available borrowings thereunder. "SEC" means the Securities and Exchange Commission. "Securities" means the securities as amended or supplemented from time to time that are authenticated and issued under this Indenture. "Senior Indebtedness of the Company," if applicable, has the meaning provided in the Authorizing Resolution. "Senior Indebtedness of the Guarantor," if applicable, has the meaning provided in the Authorizing Resolution. "Series" means a series of Securities or the Securities of a Series. 4 "Special Record Date" has the meaning provided in Section 2.13. "Subsidiary" means any corporation of which at least a majority in interest of the outstanding stock having by the terms thereof voting power under ordinary circumstances to elect a majority of the directors of such corporation, irrespective of whether or not at the time stock of any other class or classes of such corporation shall have or might have voting power by reason of the happening of any contingency, is at the time, directly or indirectly, owned or controlled by the Guarantor. "Term Loan Agreement" means the Term Loan Agreement dated as of July 25, 2000, as amended, between First Huntingdon Finance Corp., Toll Brothers, Inc., certain lenders and Bank One, NA, as Administrative Agent, together with all other agreements, instruments and documents executed or delivered pursuant thereto or in connection therewith (including, without limitation, any guarantee agreements and security documents), in each case as such ageements, instruments or documents may be amended (including any amendment and restatement thereof), supplemented, extended, renewed, refinanced, replaced, increased, restructured or otherwise modified from time to time (including (i) through execution of a new facility with one or more different lenders or (ii) through increasing the amount of available borrowings thereunder. "TIA" means the Trust Indenture Act of 1939 (15 U.S. Code Sections 77aaa-77bbbb) as in effect on the date of this Indenture and as it may be amended from time to time. "Trustee" means the party named as such in this Indenture until a successor replaces it and thereafter means the successor. "Trust Officer" when used with respect to the Trustee means any officer within the Corporate Trust Department (or any successor group) of the Trustee, including any Vice President, Assistant Vice President, Trust Officer or any other officer of the Trustee customarily performing functions similar to those performed by the persons who at the time shall be such officers and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of such officer's knowledge of and familiarity with the particular subject. Section 1.02 Incorporation by Reference of Trust Indenture Act. Whenever this Indenture refers to a provision of the TIA, the provision is incorporated by reference in and made a part of this Indenture. The following TIA terms used in this Indenture have the following meanings: "commission" means the SEC. "indenture securities" means the Securities. "indenture security holder" means a Securityholder or Holder. "indenture to be qualified" means this Indenture. "indenture trustee" or "institutional trustee" means the Trustee. "obligor on the indenture securities" means the Company, the Guarantor or any other obligor on the indenture securities. 5 All other TIA terms used in this Indenture that are defined by the TIA, defined by TIA reference to another statute or defined by SEC rule have the meanings assigned to them. Section 1.03 Incorporation by Reference of Provisions of Securities. Whenever this Indenture refers to a provision of the Securities, the provision is incorporated by reference in and made a part of this Indenture. Section 1.04 Rules of Construction. Unless the context otherwise requires: (1) a term has the meaning assigned to it; (2) an accounting term not otherwise defined has the meaning assigned to it in accordance with generally accepted accounting principles at the time of the relevant computation; (3) "or" is not exclusive; (4) words in the singular include the plural, and in the plural include the singular; and (5) provisions apply to successive events and transactions. ARTICLE 2. THE SECURITIES Section 2.01 Forms Generally. The Securities and the Guarantee, respectively, of each series shall be in such forms (including global form) as shall be established by or pursuant to an Authorizing Resolution or in one or more supplemental indentures hereto, in each case with such appropriate provisions as are required or permitted by this Indenture, and may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon as may be required to comply with the rules of any securities exchange or depositary therefor or as may, consistent herewith, be determined appropriate by the Officers executing such Securities, as evidenced by their execution thereof. If the form of any series of Securities is established by action taken pursuant to an Authorizing Resolution, a copy of an appropriate record of such action shall be certified by the Secretary or any Assistant Secretary of the Company and delivered to the Trustee at or prior to the delivery of a written order of the Company signed by two Officers or an Officer and an Assistant Treasurer of the Company for the authentication and delivery of such Securities. The definitive Securities shall be printed, lithographed or engraved on steel engraved borders or may be produced in any other manner, provided that such method is permitted by the rules of any securities exchange on which such Securities may be listed, all as determined by the Officers executing such Securities, as evidenced by their execution of such Securities. The terms and provisions in the Securities shall constitute, and are hereby expressly made, a part of this Indenture. 6 Section 2.02 Form of Trustee's Certificate of Authentication. The Trustee's certificate of authentication shall be in substantially the following form: This is one of the Securities of the series designated herein referred to in the within mentioned Indenture. BANK ONE TRUST COMPANY, NA As Trustee By:_________________________________ Authorized Signatory Section 2.03 Amount Unlimited, Issuable in Series. The aggregate principal amount of Securities that may be issued under this Indenture is unlimited. The Securities may be issued from time to time in one or more Series. Each Series shall be created by an Authorizing Resolution or a supplemental indenture that establishes the terms of the Series, which may include the following: (1) the title of the Series; (2) any limit upon the aggregate principal amount of the Series which may be authenticated and delivered under this Indenture (except for Securities authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of other Securities which, pursuant to Sections 2.08, 2.09, 2.11 or 10.05 and except for any Securities which, pursuant to Section 2.04, are deemed never to have been authenticated and delivered hereunder); (3) the interest rate or method of calculation of the interest rate; (4) the date from which interest will accrue; (5) the Record Dates for interest payable on Securities of the Series; (6) the dates when, places where and manner in which principal and interest are payable; (7) the Registrar and Paying Agent; (8) the terms of any mandatory or optional redemption by the Company; (9) the terms of any redemption at the option of Holders; (10) the denominations in which Securities are issuable; (11) whether Securities will be issued in registered or bearer form and the terms of any such forms of Securities; 7 (12) whether any Securities will be represented by a global Security and the terms of any such global Security; (13) the currencies (including any composite currency) in which principal or interest or both may be paid; (14) if payments of principal or interest may be made in a currency other than that in which Securities are denominated, the manner for determining such payments; (15) provisions for electronic issuance of Securities or issuance of Securities in uncertificated form; (16) any Events of Default or covenants in addition to or in lieu of those set forth in this Indenture; (17) whether and upon what terms Securities may be defeased; (18) the respective forms of the Securities and the Guarantees; (19) whether the Securities of such Series will be convertible into Common Stock of the Guarantor and the terms thereof (including without limitation the Conversion Price, the conversion period and any other provision in addition to or in lieu of those set forth in this Indenture); (20) whether the Securities and Guarantees of such Series shall be subordinated to any obligations of the Company or the Guarantor, and the obligations to which such subordination will apply; (21) whether the Securities of such Series and/or the Guarantees of such Series will be secured and, if applicable, any provisions for securing all or any portion of the indebtedness evidenced by the Securities of such Series and/or the Guarantees of such Series; (22) any terms that may be required by or advisable under applicable law; and (23) any other terms not inconsistent with this Indenture. All Securities of one Series need not be issued at the same time and, unless otherwise provided, a Series may be reopened for issuances of additional Securities of such Series pursuant to an Authorizing Resolution, an Officers' Certificate or in any indenture supplemental hereto. The creation and issuance of a Series and the authentication and delivery thereof are not subject to any conditions precedent. Section 2.04 Execution and Authentication. Two Officers shall sign the Securities for the Company by manual or facsimile signature. The Company's seal shall be reproduced on the Securities. Two Officers of the Guarantor shall sign the notation of the Guarantee by manual or facsimile signature. 8 If an Officer whose signature is on a Security no longer holds that office at the time the Trustee authenticates the Security, the Security shall be valid nevertheless. A Security shall not be valid until the Trustee manually signs the certificate of authentication on the Security. The signature shall be conclusive evidence that the Security has been authenticated under this Indenture. The Trustee shall authenticate Securities for original issue upon a written order of the Company signed by two Officers or by an Officer and an Assistant Treasurer of the Company. Each Security shall be dated the date of its authentication. In authenticating Securities, and accepting the additional responsibilities under this Indenture in relation to such Securities, the Trustee shall be entitled to receive, and (subject to the TIA) shall be fully protected in relying upon, an Opinion of Counsel stating that all conditions precedent to the authentication and delivery of the Securities have been complied with and that the Securities have been duly executed and, when the Securities have been duly authenticated and delivered by the Trustee, will be duly issued and delivered and will constitute valid and legally binding obligations of the Company, enforceable in accordance with their terms, subject to any applicable bankruptcy, insolvency (including, without limitation, all laws relating to fraudulent transfers), reorganization, moratorium or similar laws affecting the enforcement of creditors' rights generally and subject to the effect of general principles of equity, including, without limitation, concepts of materiality, reasonableness, good faith and fair dealing (regardless of whether enforcement is considered in a proceeding in equity or at law). Section 2.05 Registrar and Paying Agent. The Company shall maintain an office or agency where Securities may be presented for registration of transfer, for exchange or, if applicable, for conversion (in the case of conversion, as agent for the Guarantor) ("Registrar") and an office or agency where Securities may be presented for payment ("Paying Agent"). The Registrar shall keep a register of the Securities and of their transfer. The Company may have one or more co-registrars and one or more additional paying agents. The term "Paying Agent" includes any additional paying agent. The Company shall enter into an appropriate agency agreement with any Registrar, Paying Agent or co-registrar not a party to this Indenture. The agreement shall implement the provisions of this Indenture that relate to such agent. The Company shall notify the Trustee of the name and address of any such agent. If the Company fails to maintain a Registrar or Paying Agent, the Trustee shall act as such. The Company initially appoints the Trustee as Registrar and Paying Agent. Section 2.06 Paying Agent To Hold Money in Trust. Each Paying Agent shall hold in trust for the benefit of the Securityholders or the Trustee all money held by the Paying Agent for the payment of principal or interest on the Securities, and shall notify the Trustee of any default by the Company (or any other obligor on the Securities) in making any such payment. While any such default continues, the Trustee shall require a Paying Agent to pay all money held by it to the Trustee. If the Company or a Subsidiary acts as Paying Agent, it shall segregate the money and hold it as a separate trust fund. The Company at any time may require a Paying Agent to pay all money held by it to the Trustee. Upon doing so the Paying Agent shall have no further liability for the money. 9 Section 2.07 Securityholder Lists. The Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of Securityholders. If the Trustee is not the Registrar, the Company shall furnish to the Trustee on or before each Interest Payment Date and at such other times as the Trustee may request in writing a list in such form and as of such date as the Trustee may reasonably require of the names and addresses of Securityholders. Section 2.08 Transfer and Exchange. Where a Security is presented to the Registrar or a co-registrar with a request to register a transfer, the Registrar shall register its transfer as requested if its reasonable requirements are met. Where Securities are presented to the Registrar or a co-registrar with a request to exchange them for an equal principal amount of Securities of other denominations, the Registrar shall make the exchange as requested if the same requirements are met. To permit transfers and exchanges, the Trustee shall authenticate Securities at the Registrar's request. The Registrar need not transfer or exchange any Security selected for redemption, except the unredeemed part thereof if the Security is redeemed in part, or transfer or exchange any Securities for a period of 15 days before a selection of Securities to be redeemed. The Company may charge a reasonable fee for any transfer or exchange (including the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any such transfer or exchange and any other expenses in connection therewith) but not for any exchange pursuant to Section 2.11, 3.06 or 12.05. This Section 2.08 is subject to the provisions of any series of the Securities providing for the subordination or seniority of such series and the related Guarantees of such series in right of payment to other indebtedness of the Company and the Guarantor, respectively. Section 2.09 Replacement Securities. If the Holder of a Security claims that the Security has been lost, destroyed or wrongfully taken, the Company shall issue and the Trustee shall authenticate a replacement Security and the Guarantor shall endorse the Guarantee thereon if the Trustee's reasonable requirements are met. An indemnity bond must be sufficient in the judgment of the Company, the Guarantor and the Trustee to protect the Company, the Guarantor, the Trustee, the Paying Agent, the Registrar or any co-registrar from any loss which any of them may suffer if a Security is replaced. The Company may charge for its expenses in replacing a Security. Every replacement Security is an additional obligation of the Company and the Guarantor. Section 2.10 Outstanding Securities. Securities outstanding at any time are all Securities authenticated by the Trustee except for those presented to it by the Company or its designee for cancellation and those described in this Section as not outstanding. A Security does not cease to be outstanding because the Company, the Guarantor or one of their Affiliates holds the Security. 10 If a Security is replaced pursuant to Section 2.09, it ceases to be outstanding unless the Trustee receives proof satisfactory to it that the replaced Security is held by a bona fide purchaser. If the Paying Agent holds on a redemption date or maturity date money sufficient to pay Securities payable on that date, then on and after that date such Securities cease to be outstanding and interest on them ceases to accrue. If a Security is called for redemption or if it matures in less than six months and if the Company has satisfied its obligation to pay the Security, or if a Security has been converted in accordance with the provisions of Article 10, the Company and the Trustee need not treat the Security as outstanding in determining whether Holders of the required principal amount of Securities have concurred in any direction, waiver or consent. For each series of Original Issue Discount Securities, the principal amount of such Securities that shall be deemed to be outstanding and used to determine whether the necessary Holders have given any request, demand, authorization, direction, notice, consent or waiver shall be the principal amount of such Securities that could be declared to be due and payable upon acceleration upon an Event of Default as of the date of such determination. When requested by the Trustee, the Company will advise the Trustee of such amount, showing its computations in reasonable detail. Subject to the foregoing provisions of this Section, each Security delivered under this Indenture upon registration of transfer of or in exchange for or in lieu of any other Security shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by such other Security. Section 2.11 Temporary Securities. Until definitive Securities are ready for delivery, the Company may prepare and the Trustee shall authenticate temporary Securities and the Guarantor shall endorse the Guarantee thereon. Temporary Securities shall be substantially in the form of definitive Securities but may have variations that the Company considers appropriate for temporary Securities. Without unreasonable delay, the Company shall prepare and the Trustee shall authenticate definitive Securities and the Guarantor shall endorse the Guarantee thereon in exchange for temporary Securities. Section 2.12 Cancellation. The Company at any time may deliver Securities to the Trustee for cancellation. The Registrar and the Paying Agent shall forward to the Trustee any Securities surrendered to them for transfer, exchange, conversion or payment. The Trustee and no one else shall cancel and destroy all Securities surrendered for transfer, exchange, conversion, payment or cancellation in accordance with its customary procedure. Unless the Authorizing Resolution so provides, the Company may not issue new Securities to replace Securities it has paid or delivered to the Trustee for cancellation. Section 2.13 Defaulted Interest. If the Company defaults in a payment of interest on the Securities, it shall pay the defaulted interest in any lawful manner. It may pay the defaulted interest, plus any interest payable on the interest (to the extent lawful) if an Event of Default has occurred and is continuing, to the Persons who are Securityholders on a subsequent special record date (the "Special Record Date"). The Company shall fix the subsequent Special Record Date and payment date. At least 15 days before such Special Record Date, the Company shall give notice to the Trustee and shall mail to each Securityholder a notice that states the subsequent Special Record Date, the payment date, and the amount of defaulted interest to be paid. 11 Section 2.14 Global Securities. Unless the Authorizing Resolution provides otherwise, the Company may issue some or all of the Securities of a Series in temporary or permanent global form. A global Security shall represent that amount of Securities of a Series as specified in the global Security or as endorsed thereon from time to time. At the Company's request, the Registrar shall endorse a global Security to reflect the amount of any increase or decrease in the Securities represented thereby. The Company may issue a global Security only to a depositary designated by the Company. A depositary may transfer a global Security only as a whole to its nominee or to a successor depositary. The Authorizing Resolution may establish, among other things, the manner of paying principal and interest on a global Security and whether and upon what terms a beneficial owner of an interest in a global Security may exchange such interest for definitive Securities. The Company and the Trustee shall not be responsible for any acts or omissions of a depositary, for any depositary records of beneficial ownership interests or for any transactions between the depositary and beneficial owners. ARTICLE 3. REDEMPTION Section 3.01 Notices to Trustee. Securities of a Series that are redeemable prior to maturity shall be redeemable in accordance with their terms and, unless the Authorizing Resolution provides otherwise, in accordance with this Article. If the Company wants to redeem Securities pursuant to Paragraph 5 of the Securities, it shall notify the Trustee in writing of the redemption date and the principal amount of Securities to be redeemed. Any such notice may be canceled at any time prior to notice of such redemption being mailed to Holders. Any such canceled notice shall be void and of no effect. If the Company wants to credit any Securities previously redeemed, retired or acquired against any redemption pursuant to Paragraph 6 of the Securities, it shall notify the Trustee of the amount of the credit and it shall deliver any Securities not previously delivered to the Trustee for cancellation with such notice. The Company shall give each notice provided for in this Section 3.01 at least 10 Business Days before the notice of any such redemption is to be mailed to Holders (unless a shorter notice shall be satisfactory to the Trustee). 12 Section 3.02 Selection of Securities To Be Redeemed. If less than all the Securities of a Series are to be redeemed, the Trustee shall select the Securities to be redeemed, if the Securities of such Series are listed on a national securities exchange, in accordance with the rules of such exchange, or if the Securities of such Series are not so listed, on either a pro rata basis or by lot or by such method as the Trustee shall deem fair and appropriate. The Trustee shall make the selection from Securities outstanding and not previously called for redemption. Securities in denominations of $1,000 may only be redeemed in whole. The Trustee may select for redemption portions (equal to $1,000 or any integral multiple thereof) of the principal of Securities that have denominations larger than $1,000. Provisions of this Indenture that apply to Securities called for redemption also apply to portions of Securities called for redemption. Section 3.03 Notice of Redemption. At least 30 days but not more than 60 days before a redemption date, the Company shall mail a notice of redemption by first-class mail to each Holder of Securities to be redeemed. The notice shall identify the Securities to be redeemed and shall state: (1) the redemption date; (2) the redemption price; (3) the name and address of the Paying Agent; (4) in the event that any Security is to be redeemed in part only, the portion of the principal amount thereof to be redeemed and that on and after the redemption date, upon surrender of such Security, a new Security or Securities in principal amount equal to the unredeemed portion thereof will be issued; (5) that Securities called for redemption must be surrendered to the Paying Agent to collect the redemption price; (6) that interest on Securities called for redemption ceases to accrue on and after the redemption date; (7) that the Securities are being redeemed pursuant to the mandatory redemption or the optional redemption provisions, as applicable; and (8) if applicable, the current Conversion Price and the date on which the right to convert the Securities into Common Stock will expire. At the Company's request, the Trustee shall give the notice of redemption in the Company's name and at the Company's expense. Section 3.04 Effect of Notice of Redemption. Once notice of redemption is mailed, Securities called for redemption become due and payable on the redemption date and at the redemption price. Upon surrender to the Paying Agent, such Securities shall be paid at the redemption price, plus accrued interest to the redemption date. 13 Section 3.05 Deposit of Redemption Price. Prior to the redemption date, the Company or its designee shall deposit with the Paying Agent money sufficient to pay the redemption price of and accrued and unpaid interest on all Securities to be redeemed on that date. Section 3.06 Securities Redeemed in Part. Upon surrender of a Security that is redeemed in part, the Trustee shall authenticate for the Holder a new Security and the Guarantor shall endorse the Guarantee thereon equal in principal amount to the unredeemed portion of the Securities surrendered. ARTICLE 4. COVENANTS Section 4.01 Payment of Securities. The Company shall pay the principal of and interest on Securities of a Series on the dates and in the manner provided in the Securities of the Series. An installment of principal or interest shall be considered paid on the date due if the Trustee or Paying Agent holds on that date immediately available legal tender funds designated for, available and sufficient to pay the installment. The Company shall pay interest on overdue principal at the rate borne by the Series; it shall pay interest on overdue installments of interest at the same rate to the extent lawful. Section 4.02 SEC Reports. Within 15 days after each of the Guarantor and the Company files with the SEC copies of its annual reports and other information, documents and reports (or copies of such portions of any of the foregoing as the SEC may by rules and regulations prescribe) which they are required to file with the SEC pursuant to Section 13 or 15(d) of the Exchange Act, the Guarantor and the Company shall file the same with the Trustee. If the Guarantor shall cease to be subject to the requirements of Section 13 or 15(d) of the Exchange Act, the Guarantor shall file with the Trustee, within 15 days after the last date on which it would have been required to make such a filing with the SEC, financial statements, including any notes thereto, and a "Management's Discussion and Analysis of Financial Condition and Results of Operations," each comparable to that which the Guarantor would have been required to include in such annual reports, information, documents or other reports, if the Guarantor were then subject to the requirements of Section 13 or 15(d) of the Exchange Act. The Company and the Guarantor also shall comply with the other provisions of TIA Section 314(a). Section 4.03 Compliance Certificate. The Company and the Guarantor each shall deliver to the Trustee within 120 days after the end of their respective fiscal year an Officers' Certificate satisfying the requirements of Section 3.14(a)(4) of the TIA and stating whether or not the signers know of any Default or Event of Default. If they do know of such a Default or Event of Default, the certificate shall describe the Default or Event of Default. 14 ARTICLE 5. SUCCESSOR CORPORATION Section 5.01 When the Company and the Guarantor May Merge, etc. Neither the Company nor the Guarantor shall consolidate with or merge into, or transfer all or substantially all of its assets to, any other person unless (i) such other Person is a corporation organized and existing under the laws of the United States or a State thereof or the District of Columbia and expressly assumes by supplemental indenture all the obligations of the Company or the Guarantor under the Indenture and either the Securities or the Guarantee, as the case may be; and (ii) immediately after giving effect to such transaction no Default or Event of Default shall have occurred and be continuing. Thereafter all such obligations of the predecessor corporation shall terminate. ARTICLE 6. SUBORDINATION Section 6.01 Agreement To Subordinate. The provisions of this Article 6 shall apply to the Securities of a Series to the extent specified in the Authorizing Resolution relating to such Series. Each reference in this Article 6 to "a Security" or "the Securities" refers to the Securities of each such Series so designated. The Company, for itself and its successors, and each Holder, by accepting Securities, agrees that the payment of the principal of, interest on or any other amounts due on the Securities are subordinated in right of payment, to the extent and in the manner stated in this Article 6, to the prior payment in full of all Senior Indebtedness of the Company. Each Holder by accepting Securities authorizes and directs the Trustee on behalf of such Holder to take such action as may be necessary or appropriate to effectuate, as between the holders of Senior Indebtedness of the Company and such Holder, the subordination provided in this Article 6 and appoints the Trustee attorney-in-fact for such Holder for such purpose. This Article 6 shall constitute a continuing offer to all Persons who, in reliance upon such provisions, become holders of, or continue to hold, Senior Indebtedness of the Company, and such provisions are made for the benefit of the holders of Senior Indebtedness of the Company and such holders are made obligees hereunder and they and/or each of them may enforce such provisions. Section 6.02 Company Not To Make Payments with Respect to Securities in Certain Circumstances. (a) Upon the maturity of any Senior Indebtedness of the Company by lapse of time, acceleration (unless waived) or otherwise, all principal thereof and interest thereon shall first be paid in full, or such payment duly provided for in cash or in a manner satisfactory to the holders of such Senior Indebtedness of the Company, before any payment is made on account of the principal of or interest on the Securities or to acquire any of the Securities. 15 (b) In the event that notwithstanding the provisions of this Section 6.02 the Company shall make any payment to the Trustee on account of the principal of or interest on the Securities after the happening of a default in payment of the principal of or interest on Senior Indebtedness of the Company, then, unless and until such default shall have been cured or waived or shall have ceased to exist, such payment (subject to the provisions of Sections 6.06 and 6.07) shall be held by the Trustee, in trust for the benefit of, and shall be paid forthwith over and delivered to, the holders of Senior Indebtedness of the Company (pro rata as to each of such holders on the basis of the respective amounts of Senior Indebtedness of the Company held by them) or their representative or the trustee under the indenture or other agreement (if any) pursuant to which Senior Indebtedness of the Company may have been issued, as their respective interests may appear, for application to the payment of all Senior Indebtedness of the Company remaining unpaid to the extent necessary to pay all Senior Indebtedness of the Company in full in accordance with its terms, after giving effect to any concurrent payment or distribution to or for the holders of the Senior Indebtedness of the Company. The Company shall give prompt written notice to the Trustee of any default in the payment of principal of or interest on any Senior Indebtedness of the Company. Section 6.03 Securities Subordinated to Prior Payment of All Senior Indebtedness of the Company on Dissolution, Liquidation or Reorganization of the Company. Upon any distribution of assets of the Company in any dissolution, winding up, liquidation or reorganization of the Company (whether in bankruptcy, insolvency or receivership proceedings or upon an assignment for the benefits of creditors or otherwise): (a) the holders of all Senior Indebtedness of the Company shall first be entitled to receive payment in full of the principal thereof and interest due thereon before the Holders of the Securities are entitled to receive any payment on account of the principal of or interest on the Securities; (b) any payment or distribution of assets of the Company of any kind or character, whether in cash, property or securities, to which the Holders of the Securities or the Trustee on behalf of the Holders of the Securities would be entitled except for the provisions of this Article 6, including any such payment or distribution which may be payable or deliverable by reason of the payment of any other indebtedness of the Company being subordinated to the payment of the Securities, shall be paid by the liquidating trustee or agent or other Person making such payment or distribution directly to the holders of the Senior Indebtedness of the Company or their representative, or to the trustee under any indenture under which Senior Indebtedness of the Company may have been issued (pro rata as to each such holder, representative or trustee on the basis of the respective amounts of unpaid Senior Indebtedness of the Company held or represented by each), to the extent necessary to make payment in full of all Senior Indebtedness of the Company remaining unpaid, after giving effect to any concurrent payment or distribution or provision therefor to the holders of such Senior Indebtedness of the Company, except that Holders of the Securities would be entitled to receive securities that are subordinated to Senior Indebtedness of the Company to at least the same extent as the Securities; and 16 (c) in the event that notwithstanding the foregoing provisions of this Section 6.03, any payment or distribution of assets of the Company of any kind or character whether in cash, property or securities, including any such payment or distribution which may be payable or deliverable by reason of the payment of any other indebtedness of the Company being subordinated to the payment of the Securities, shall be received by the Trustee or the Holders of the Securities on account of principal of or interest on the Securities before all Senior Indebtedness of the Company is paid in full, or effective provision made for its payment, such payment or distribution (subject to the provisions of Sections 6.06 and 6.07) shall be received and held in trust for and shall be paid over to the holders of the Senior Indebtedness of the Company remaining unpaid or unprovided for or their representative, or to the trustee under any indenture under which such Senior Indebtedness of the Company may have been issued (pro rata as provided in subsection (b) above), for application to the payment of such Senior Indebtedness of the Company until all such Senior Indebtedness of the Company shall have been paid in full, after giving effect to any concurrent payment or distribution or provision therefor to the holders of such Senior Indebtedness of the Company, except that Holders of the Securities would be entitled to receive securities that are subordinated to Senior Indebtedness of the Company to at least the same extent as the Securities. The Company shall give prompt written notice to the Trustee of any dissolution, winding up, liquidation or reorganization of the Company. Section 6.04 Securityholders To Be Subrogated to Rights of Holders of Senior Indebtedness of the Company. Subject to the payment in full of all Senior Indebtedness of the Company, the Holders of the Securities shall be subrogated equally and ratably to the rights of the holders of the Senior Indebtedness of the Company to receive payments or distributions of assets of the Company applicable to the Senior Indebtedness of the Company until all amounts owing on the Securities shall be paid in full, and for the purpose of such subrogation no payments or distributions to the holders of the Senior Indebtedness of the Company by or on behalf of the Company or by or on behalf of the Holders of the Securities by virtue of this Article 6 which otherwise would have been made to the Holders of the Securities shall, as among the Company, its creditors other than holders of the Senior Indebtedness of the Company and the Holders of the Securities, be deemed to be payment by the Company to or on account of the Senior Indebtedness of the Company, it being understood that the provisions of this Article 6 are intended solely for the purpose of defining the relative rights of the Holders of the Securities, on the one hand, and the holders of the Senior Indebtedness of the Company, on the other hand. Section 6.05 Obligation of the Company Unconditional. Nothing contained in this Article 6 or elsewhere in this Indenture or in any Security is intended to or shall impair, as between the Company and the Holders of the Securities, the obligation of the Company, which is absolute and unconditional, to pay to the Holders of the Securities the principal of and interest on the Securities as and when the same shall become due and payable in accordance with their terms, or is intended to or shall affect the relative rights of the Holders of the Securities and creditors of the Company other than the holders of the Senior Indebtedness of the Company, nor shall anything herein or therein prevent the Trustee or the Holder of any Security from exercising all remedies otherwise permitted by applicable law upon default under this Indenture, subject to the rights, if any, under this Article 6 of the holders of Senior Indebtedness of the Company in respect of cash, property or securities of the Company received upon the exercise of any such remedy. Upon any distribution of assets of the Company referred to in this Article 6, the Trustee, subject to the provisions of Sections 9.01 and 9.02, and the Holders of the Securities shall be entitled to rely upon any order or decree made by any court of competent jurisdiction in which such dissolution, winding up, liquidation or reorganization proceedings are pending, or a certificate of the liquidating trustee or agent or other Person making any distribution to the Trustee or the Holders of the Securities, for the purpose of ascertaining the Persons entitled to participate in such distribution, the holders of the Senior Indebtedness of the Company and other Indebtedness of the Company, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article 6. 17 Nothing contained in this Article 6 or elsewhere in this Indenture or in any Security is intended to or shall affect the obligation of the Company to make, or prevent the Company from making, at any time except during the pendency of any dissolution, winding up, liquidation or reorganization proceeding, and except during the continuance of any default specified in Section 6.02 (not cured or waived), payments at any time of the principal of or interest on the Securities. Section 6.06 Knowledge of Trustee. Notwithstanding any provision of this Indenture, the Trustee shall not be charged with knowledge of the existence of any facts which would prohibit the making of any payment of monies to or by the Trustee until two Business Days after the Trustee shall have received written notice thereof from the Company, any Securityholder or any Paying Agent or the holder or representative of any class of Senior Indebtedness of the Company. Section 6.07 Application by Trustee of Monies Deposited With It. If at least two Business Days prior to the date on which by the terms of this Indenture any monies deposited with the Trustee or any Paying Agent may become payable for any purpose (including, without limitation, the payment of either the principal of or the interest on any Security) the Trustee shall not have received with respect to such monies the notice provided for in Section 6.06, then the Trustee shall have full power and authority to receive such monies and to apply the same to the purpose for which they were received and shall not be affected by any notice to the contrary which may be received by it on or after such date. This Section shall be construed solely for the benefit of the Trustee and such Paying Agent and shall not otherwise affect the rights of holders of Senior Indebtedness of the Company. Section 6.08 Subordination Rights Not Impaired by Acts or Omissions of Company or Holders of Senior Indebtedness of the Company. No right of any present or future holders of any Senior Indebtedness of the Company to enforce subordination as provided herein shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of the Company or by any act or failure to act, in good faith, by any such holder, or by any noncompliance by the Company with the terms of this Indenture, regardless of any knowledge thereof which any such holder may have or be otherwise charged with. The holders of Senior Indebtedness of the Company may extend, renew, modify or amend the terms of the Senior Indebtedness of the Company or any security therefor and release, sell or exchange such security and otherwise deal freely with the Company, all without affecting the liabilities and obligations of the parties to this Indenture or the Holders. No provision in any supplemental indenture which affects the superior position of the holders of Senior Indebtedness of the Company shall be effective against the holders of Senior Indebtedness of the Company who have not consented thereto. 18 Section 6.09 Securityholders Authorize Trustee To Effectuate Subordination of Securities. Each Holder of Securities by acceptance thereof authorizes and expressly directs the Trustee on its, his or her behalf to take such action as may be necessary or appropriate to effectuate the subordination provided in this Article 6 and appoints the Trustee its, his or her attorney-in-fact for such purpose, including, in the event of any dissolution, winding up, liquidation or reorganization of the Company (whether in bankruptcy, insolvency or receivership proceedings or upon an assignment for the benefit of creditors or otherwise) tending towards liquidation of the business and assets of the Company, the immediate filing of a claim for the unpaid balance of its, his or her Securities in the form required in said proceedings and cause said claim to be approved. If the Trustee does not file a proper claim or proof of debt in the form required in such proceedings prior to 30 days before the expiration of the time to file such claim or claims, then the holders of Senior Indebtedness of the Company have the right to file and are hereby authorized to file an appropriate claim for and on behalf of the Holders of said Securities. Section 6.10 Right of Trustee To Hold Senior Indebtedness of the Company. The Trustee shall be entitled to all of the rights set forth in this Article 6 in respect of any Senior Indebtedness of the Company at any time held by it to the same extent as any other holder of Senior Indebtedness of the Company and nothing in this Indenture shall be construed to deprive the Trustee of any of its rights as such holder. Section 6.11 Article Six Not To Prevent Events of Default. The failure to make a payment on account of principal or interest by reason of any provision in this Article 6 shall not be construed as preventing the occurrence of an Event of Default under Section 8.01. ARTICLE 7. GUARANTEE Section 7.01 Guarantee. The Guarantor hereby unconditionally guarantees (such guarantee to be referred to herein as the "Guarantee") to each Holder of a Security authenticated and delivered by the Trustee and to the Trustee and its successors and assigns, irrespective of the validity and enforceability of this Indenture, the Securities or the obligations of the Company hereunder or thereunder, (i) the due and punctual payment of the principal of and any interest on the Securities, whether at maturity or on an Interest Payment Date, by acceleration or otherwise, and interest on the overdue principal of and interest, if any, on the Securities, if lawful, and all other obligations of the Company to the Holders or the Trustee hereunder or under the Securities shall be promptly paid in full, all in accordance with the terms hereof and thereof including all amounts payable to the Trustee under Section 9.07 hereof, and (ii) in case of any extension of time of payment or renewal of any Securities or any of such other obligations, that the same shall be promptly paid in full when due or to be performed in accordance with the terms of the extension or renewal, whether at stated maturity, by acceleration or otherwise. 19 If the Company fails to make any payment when due of any amount so guaranteed for whatever reason, the Guarantor shall be obligated to pay the same immediately. The Guarantor hereby agrees that its obligations hereunder shall be continuing, absolute and unconditional, irrespective of, and shall be unaffected by, the validity, regularity or enforceability of the Securities, this Indenture, the absence of any action to enforce the same, any waiver or consent by any Holder of the Securities or the Trustee with respect to any provisions hereof or thereof, the recovery of any judgment against the Company, any action to enforce the same or any other circumstance which might otherwise constitute a legal or equitable discharge or defense of the Guarantor. The Guarantor hereby waives diligence, presentment, demand of payment, demand of performance, filing of claims with a court in the event of insolvency or bankruptcy of the Company, any right to require a proceeding first against the Company, the benefit of discussion, protest, notice and all demand whatsoever and covenants that this Guarantee shall not be discharged except by complete performance of the obligations contained in the Securities, in this Indenture and in this Article 7. If any Securityholder or the Trustee is required by any court or otherwise to return to the Company or the Guarantor, or any custodian, trustee, liquidator or other similar official acting in relation to the Company or the Guarantor, any amount paid by the Company or the Guarantor to the Trustee or such Securityholder, this Article 7, to the extent theretofore discharged, shall be reinstated in full force and effect. The Guarantor agrees that it shall not be entitled to any right of subrogation in relation to the Securityholders in respect of any obligations guaranteed hereby until payment in full of all obligations guaranteed hereby. The Guarantor further agrees that, as between the Guarantor, on the one hand, and the Holders and the Trustee, on the other hand, (i) the maturity of the obligations guaranteed hereby may be accelerated as provided in Article 8 for the purposes of the Guarantee, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the obligations guaranteed hereby, and (ii) in the event of any declaration of acceleration of such obligations as provided in Article 8 such obligations (whether or not due and payable) shall forthwith become due and payable by the Guarantor for the purpose of this Article 7. In addition, without limiting the foregoing, upon the effectiveness of an acceleration under Article 8, the Trustee may make a demand for payment on the Securities under the Guarantee provided hereunder and not discharged. The Guarantor shall be subrogated to all rights of the Holder of any Securities against the Company in respect of any amounts paid to the Holder by the Guarantor pursuant to the provisions of this Guarantee; provided that the Guarantor shall not be entitled to enforce, or to receive any payments arising out of or based upon, such right of subrogation until the principal of and interest on all the Securities shall have been paid in full. The Guarantee set forth in this Section 7.01 shall not be valid or become obligatory for any purpose with respect to a Security until the certificate of authentication on such Security shall have been signed by the Trustee or any duly appointed agent. Section 7.02 Agreement To Subordinate. The provisions of this Article 7 shall apply to the Securities of a Series to the extent specified in the Authorizing Resolution relating to such Series. Each reference in this Article 7 to "a Security" or "the Securities" refers to the Securities of each such Series so designated. 20 The Guarantor, for itself and its successors, and each Holder, by accepting the Securities, agrees that the payment of the principal of, interest on and any other amounts due on the Securities pursuant to the Guarantee are subordinated in right of payment, to the extent and in the manner stated in this Article 7, to the prior payment in full of all Senior Indebtedness of the Guarantor. Each Holder by accepting Securities authorizes and directs the Trustee on behalf of such Holder to take such action as may be necessary or appropriate to effectuate, as between the holders of Senior Indebtedness of the Guarantor and such Holder, the subordination provided in this Article 7 and appoints the Trustee attorney-in-fact for such Holder for such purpose. This Article shall constitute a continuing offer to all Persons who, in reliance upon such provisions, become holders of, or continue to hold, Senior Indebtedness of the Guarantor, and such provisions are made for the benefit of the holders of Senior Indebtedness of the Guarantor, and such holders are made obligees hereunder and they and/or each of them may enforce such provisions. Section 7.03 Guarantor Not To Make Payments with Respect to Securities in Certain Circumstances. (a) Upon the maturity of any Senior Indebtedness of the Guarantor by lapse of time, acceleration (unless waived) or otherwise, all principal thereof and interest thereon shall first be paid in full, or such payment duly provided for in cash or in a manner satisfactory to the holders of such Senior Indebtedness of the Guarantor, before any payment, pursuant to the Guarantee, is made on account of the principal of or interest on the Securities or to acquire any of the Securities. (b) In the event that notwithstanding the provisions of this Section 7.03 the Guarantor shall make any payment to the Trustee on account of the principal of or interest on the Securities after the happening of a default in payment of the principal of or interest on Senior Indebtedness of the Guarantor, then, unless and until such default shall have been cured or waived or shall have ceased to exist, such payment (subject to the provisions of Sections 7.07 and 7.08) shall be held by the Trustee, in trust for the benefit of, and shall be paid forthwith over and delivered to, the holders of Senior Indebtedness of the Guarantor (pro rata as to each of such holders on the basis of the respective amounts of Senior Indebtedness of the Guarantor held by them) or their representative or the trustee under the indenture or other agreement (if any) pursuant to which Senior Indebtedness of the Guarantor may have been issued, as their respective interests may appear, for application to the payment of all Senior Indebtedness of the Guarantor remaining unpaid to the extent necessary to pay all Senior Indebtedness of the Guarantor in full in accordance with its terms, after giving effect to any concurrent payment or distribution to or for the holders of Senior Indebtedness of the Guarantor. The Guarantor shall give prompt written notice to the Trustee of any default in the payment of principal of or interest on any Senior Indebtedness of the Guarantor. 21 Section 7.04 Guarantee Subordinated to Prior Payment of All Senior Indebtedness of the Guarantor on Dissolution, Liquidation or Reorganization of the Guarantor. Upon any distribution of assets of the Guarantor in any dissolution, winding up, liquidation or reorganization of the Guarantor (whether in bankruptcy, insolvency or receivership proceedings or upon an assignment for the benefit of creditors or otherwise): (a) the holders of all Senior Indebtedness of the Guarantor shall first be entitled to receive payment in full of the principal thereof and interest due thereon before the Holders of the Securities are entitled to receive any payment on account of the principal of or interest on the Securities pursuant to the Guarantee; (b) any payment or distribution of assets of the Guarantor of any kind or character, whether in cash, property or securities, to which the Holders of the Securities or the Trustee on behalf of the Holders of the Securities would be entitled except for the provisions of this Article 7, including any such payment or distribution which may be payable or deliverable by reason of the payment of any other indebtedness of the Guarantor being subordinated to the payment of the Securities, shall be paid by the liquidating trustee or agent or other Person making such payment or distribution directly to the holders of the Senior Indebtedness of the Guarantor or their representative, or to the trustee under any indenture under which Senior Indebtedness of the Guarantor may have been issued (pro rata as to each such holder, representative or trustee on the basis of the respective amounts of unpaid Senior Indebtedness of the Guarantor held or represented by each), to the extent necessary to make payment in full of all Senior Indebtedness of the Guarantor remaining unpaid, after giving effect to any concurrent payment or distribution or provision therefor to the holders of such Senior Indebtedness of the Guarantor, except that Holders of the Securities would be entitled to receive securities that are subordinated to Senior Indebtedness of the Guarantor to at least the same extent as the Securities; and (c) in the event that, notwithstanding the foregoing provisions of this Section 7.04, any payment or distribution of assets of the Guarantor of any kind or character, whether in cash, property or securities, including any such payment or distribution which may be payable or deliverable by reason of the payment of any other indebtedness of the Guarantor being subordinated to the payment of the Securities, shall be received by the Trustee or the Holders of the Securities on account of principal of or interest on the Securities before all Senior Indebtedness of the Guarantor is paid in full, or effective provision made for its payment, such payment or distribution (subject to the provisions of Sections 7.07 and 7.08) shall be received and held in trust for and shall be paid over to the holders of the Senior Indebtedness of the Guarantor remaining unpaid or unprovided for or their representative, or to the trustee under any indenture under which such Senior Indebtedness of the Guarantor may have been issued (pro rata as provided in subsection (b) above), for application to the payment of such Senior Indebtedness of the Guarantor until all such Senior Indebtedness of the Guarantor shall have been paid in full, after giving effect to any concurrent payment or distribution or provision therefor to the holders of such Senior Indebtedness of the Guarantor, except that Holders of the Securities would be entitled to receive securities that are subordinated to Senior Indebtedness of the Guarantor to at least the same extent as the Securities. 22 Upon any distribution of assets of the Guarantor referred to in this Article 7, the Trustee, subject to the provisions of Sections 9.01 and 9.02, and the Holders of the Securities shall be entitled to rely upon any order or decree made by any court of competent jurisdiction in which such dissolution, winding up, liquidation or reorganization proceedings are pending, or a certificate of the liquidating trustee or agent or other Person making any distribution to the Trustee or the Holders of the Securities, for the purpose of ascertaining the Persons entitled to participate in such distribution, the holders of the Senior Indebtedness of the Guarantor and other Indebtedness of the Guarantor, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article 7. The Guarantor shall give prompt written notice to the Trustee of any dissolution, winding up, liquidation or reorganization of the Guarantor. Section 7.05 Securityholders To Be Subrogated to Rights of Holders of Senior Indebtedness of the Guarantor. Subject to the payment in full of all Senior Indebtedness of the Guarantor, the Holders of the Securities shall be subrogated equally and ratably to the rights of the holders of the Senior Indebtedness of the Guarantor to receive payments or distributions of assets of the Guarantor applicable to the Senior Indebtedness of the Guarantor until all amounts owing on the Securities shall be paid in full, and for the purpose of such subrogation no payments or distributions to the holders of the Senior Indebtedness of the Guarantor by or on behalf of the Guarantor or by or on behalf of the Holders of the Securities by virtue of this Article 7 which otherwise would have been made to the Holders of the Securities shall, as among the Guarantor, its creditors other than holders of Senior Indebtedness of the Guarantor and the Holders of the Securities, be deemed to be payment by the Guarantor to or on account of the Senior Indebtedness of the Guarantor, it being understood that the provisions of this Article 7 are intended solely for the purpose of defining the relative rights of the Holders of the Securities, on the one hand, and the holders of the Senior Indebtedness of the Guarantor, on the other hand. Section 7.06 Obligation of the Guarantor Unconditional. Nothing contained in this Article 7 or elsewhere in this Indenture or in any Security is intended to or shall impair, as between the Guarantor and the Holders of the Securities, the obligation of the Guarantor, which is absolute and unconditional, to pay to the Holders of the Securities the principal of and interest on the Securities as and when the same shall become due and payable in accordance with the terms of the Guarantee, or is intended to or shall affect the relative rights of the Holders of the Securities and creditors of the Guarantor other than the holders of the Senior Indebtedness of the Guarantor, nor shall anything herein or therein prevent the Trustee or the Holder of any Security from exercising all remedies otherwise permitted by applicable law upon Default under this Indenture, subject to the rights, if any, under this Article 7 of the holders of Senior Indebtedness of the Guarantor in respect of cash, property or securities of the Guarantor received upon the exercise of any such remedy. Nothing contained in this Article 7 or elsewhere in this Indenture or in any Security is intended to or shall affect the obligation of the Guarantor to make, or prevent the Guarantor from making, at any time except during the pendency of any dissolution, winding up, liquidation or reorganization proceeding, and except during the continuance of any default specified in Section 7.03 (not cured or waived), payments at any time of the principal of or interest on the Securities pursuant to the Guarantee. 23 Section 7.07 Knowledge of Trustee. Notwithstanding any provision of this Indenture, the Trustee shall not be charged with knowledge of the existence of any facts which would prohibit the making of any payment of monies to or by the Trustee until two Business Days after the Trustee shall have received written notice thereof from the Guarantor, any Securityholder or any Paying Agent or the holder or representative of any class of Senior Indebtedness of the Guarantor. Section 7.08 Application by Trustee of Monies Deposited With It. If at least two Business Days prior to the date on which by the terms of this Indenture any monies deposited with the Trustee or any Paying Agent may become payable for any purpose (including, without limitation, the payment of either the principal of or the interest on any Security) the Trustee shall not have received with respect to such monies the notice provided for in Section 7.07, then the Trustee shall have full power and authority to receive such monies and to apply the same to the purpose for which they were received and shall not be affected by any notice to the contrary which may be received by it on or after such date. This Section shall be construed solely for the benefit of the Trustee and such Paying Agent and shall not otherwise affect the rights of holders of Senior Indebtedness of the Guarantor. Section 7.09 Subordination Rights Not Impaired by Acts or Omissions of Guarantor or Holders of Senior Indebtedness of the Guarantor. No right of any present or future holders of any Senior Indebtedness of the Guarantor to enforce subordination as provided herein shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of the Guarantor or by any act or failure to act, in good faith, by any such holder, or by any noncompliance by the Guarantor with the terms of this Indenture, regardless of any knowledge thereof which any such holder may have or be otherwise charged with. The holders of Senior Indebtedness of the Guarantor may extend, renew, modify or amend the terms of the Senior Indebtedness of the Guarantor, or any security therefor and release, sell or exchange such security and otherwise deal freely with the Guarantor, all without affecting the liabilities and obligations of the parties to the Indenture or the Holders. No provision in any supplemental indenture which affects the superior position of the holders of Senior Indebtedness of the Guarantor shall be effective against the holders of Senior Indebtedness of the Guarantor who have not consented thereto. Section 7.10 Securityholders Authorize Trustee To Effectuate Subordination of Guarantee. Each Holder of Securities by acceptance thereof authorizes and expressly directs the Trustee on its, his or her behalf to take such action as may be necessary or appropriate to effectuate the subordination provided in this Article 7 and appoints the Trustee its, his or her attorney-in-fact for such purpose, including, in the event of any dissolution, winding up, liquidation or reorganization of the Guarantor (whether in bankruptcy, insolvency or receivership proceedings or upon an assignment for the benefit of creditors or otherwise) tending towards liquidation of the business and assets of the Guarantor, the immediate filing of a claim for the unpaid balance, pursuant to the Guarantee, of its, his or her Securities, in the form required in said proceedings and cause said claim to be approved. If the Trustee does not file a proper claim or proof of debt in the form required in such proceeding prior to 30 days before the expiration of the time to file such claim or claims, then the holders of Senior Indebtedness of the Guarantor have the right to file and are hereby authorized to file an appropriate claim for and on behalf of the Holders of said Securities. 24 Section 7.11 Right of Trustee To Hold Senior Indebtedness of the Guarantor. The Trustee shall be entitled to all of the rights set forth in this Article 7 in respect of any Senior Indebtedness of the Guarantor at any time held by it to the same extent as any other holder of Senior Indebtedness of the Guarantor, and nothing in this Indenture shall be construed to deprive the Trustee of any of its rights as such holder. Section 7.12 Article 7 Not To Prevent Events of Default. The failure to make a payment on account of principal or interest by reason of any provision in this Article 7 shall not be construed as preventing the occurrence of an Event of Default under Section 8.01. Section 7.13 Execution and Delivery of Guarantee. To evidence the Guarantee set forth in this Article 7, the Guarantor hereby agrees that a notation of the Guarantee, substantially in the form established by or pursuant to an Authorizing Resolution or in one or more supplemental indentures in accordance with Section 2.01, shall be endorsed on each Security authenticated and delivered by the Trustee and that this Indenture shall be executed on behalf of the Guarantor by the Chairman of the Board, its President or one of its Vice Presidents under a facsimile of its seal reproduced thereon. The Guarantor hereby agrees that its Guarantee shall remain in full force and effect notwithstanding any failure to endorse on each Security a notation of the Guarantee. If an Officer whose signature is on this Indenture or on the Securities no longer holds that office at the time the Trustee authenticates the Security on which a notation of the Guarantee is endorsed, the Guarantee shall be valid nevertheless. The delivery of any Security by the Trustee, after the authentication thereof hereunder, shall constitute due delivery of the Guarantee set forth in this Indenture on behalf of the Guarantor. Section 7.14 Subordination of Indebtedness Owed by the Company to the Guarantor. Any indebtedness owed by the Company to the Guarantor shall be subordinate to all obligations of the Company with respect to the Securities and this Indenture to the same extent as the Securities are subordinated to Senior Indebtedness of the Company. Section 7.15 Officers' Certificate. If there occurs an event referred to in the first sentence of Section 7.04(c) or the first sentence of Section 7.04, the Guarantor shall promptly give to the Trustee an Officers' Certificate (on which the Trustee may conclusively rely) identifying all holders of Senior Indebtedness of the Guarantor and the principal amount of Senior Indebtedness of the Guarantor then outstanding held by each such holder and stating the reasons why such Officers' Certificate is being delivered to the Trustee. 25 ARTICLE 8. DEFAULTS AND REMEDIES Section 8.01 Events of Default. An "Event of Default" on a Series occurs if: (1) the Company or the Guarantor defaults in the payment of interest on any Security of the Series when the same becomes due and payable and the default continues for a period of 30 days whether or not such payment shall be prohibited by the provisions of Article 6 or Article 7; or (2) the Company or the Guarantor defaults in the payment of the principal of any Security of the Series when the same becomes due and payable at maturity or upon redemption, whether or not such payment shall be prohibited by the provisions of Article 6 or Article 7; or (3) the Company or the Guarantor fails to comply with any of its other agreements in the Securities, the Guarantee or this Indenture applicable to the Series and such failure continues for the period and after the notice specified below; or (4) there occurs a default in the payment of indebtedness of the Company, the Guarantor or any Subsidiary under the terms of the instrument evidencing or securing such indebtedness permitting the holder thereof to accelerate the payment of in excess of an aggregate of $10,000,000 in principal amount of such indebtedness (after the lapse of applicable grace periods) or, in the case of defaults other than payment defaults, there occurs an acceleration of any such indebtedness if such acceleration is not rescinded or annulled within 10 days after such acceleration; provided, the term "indebtedness" as used in this Section 8.01(4) shall not include an acceleration of or default on Non-Recourse Indebtedness (a) if the Guarantor would be able to declare a dividend pursuant to the terms of such Series in the amount of the excess of the aggregate book value of all property (net of any previous write-downs or reserves in respect of such property) subject to the Non-Recourse Indebtedness being accelerated or in default over such Non-Recourse Indebtedness or (b) which consists of a purchase money obligation, provided such purchase money obligation does not exceed $10,000,000 in aggregate principal amount, whether or not the Guarantor is so diligently contesting); or (5) a final judgment for the payment of money in an amount in excess of $10,000,000 shall be entered against the Company, the Guarantor or any Subsidiary, and shall remain undischarged for a period (during which execution shall not be effectively stayed) of 60 days after the date on which the right to appeal has expired; provided the term "final judgment" shall not include a Non-Recourse Judgment unless the book value of all property (net of any previous write-downs or reserves in respect of such property) subject to such Non-Recourse Judgment exceeds the amount of such Non-Recourse Judgment by more than $10,000,000; or (6) there occurs as "Event of Default," as that term is defined in the indenture relating to the 8-3/4% Senior Subordinated Notes due 2006 issued by Toll Corp., a Delaware corporation ("Toll Corp."), the 7-3/4% Senior Subordinated Notes due 2007 issued by Toll Corp., the 8-1/8% Senior Subordinated Notes due 2009 issued by Toll Corp., the 8% Senior Subordinated Notes due 2009 issued by Toll Corp. or the 8-1/4% Senior Subordinated Notes due 2011 issued by Toll Corp. (each such series being hereinafter referred to as a "Previously Issued Series"); provided that on the date of the occurrence, the outstanding principal amount of at least one Previously Issued Series to which the occurrence relates exceeds $5,000,000, or (7) the Company and the Guarantor pursuant to or within the meaning of any Bankruptcy Law: 26 (A) commences a voluntary case, (B) consents to the entry of an order for relief against it in an involuntary case, (C) consents to the appointment of a Custodian of it or for all or substantially all of its property, or (D) makes a general assignment for the benefit of its creditors; or (8) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that: (A) provides for relief against the Company and the Guarantor in an involuntary case, (B) appoints a Custodian of the Company and the Guarantor for all or substantially all of its property, or (C) orders the liquidation of the Company and the Guarantor and the order or decree remains unstayed and in effect for 90 days; or (9) the Guarantee shall for any reason (other than pursuant to its terms) cease to be in full force and effect. The term "Bankruptcy Law" means Title 11, U.S. Code or any similar Federal or State law for the relief of debtors. The term "Custodian" means any receiver, trustee, assignee, liquidator or similar official under any Bankruptcy Law. A default under clause (3) is not an Event of Default until the Trustee or the Holders of at least 25% in principal amount of the Securities of the Series affected notify the Company of the default and the Company does not cure the default within 60 days after receipt of the notice. The notice must specify the default, demand that it be remedied and state that the notice is a "Notice of Default." Section 8.02 Acceleration. If an Event of Default (other than an Event of Default under Section 8.01(7) or 8.01(8)) on a Series occurs and is continuing, the Trustee by notice to the Company and the Person or Persons designated to receive notices for the Administrative Agent (or other Person acting on behalf of the banks) under the Revolving Credit Agreement and/or the Term Loan Agreement, or the Holders of at least 25% in principal amount of the outstanding Securities of the Series by notice to the Company, the Trustee and such Person or Persons (either such notice is referred to herein as an "Acceleration Notice") may declare the unpaid principal of and accrued and unpaid interest on all the Securities of the Series to be due and payable if, with respect to such Series, (i)(a) no Designated Senior Debt of the Company or the Guarantor is outstanding, or (b) if the Securities of the Series are not 27 subordinated to other indebtedness of the Company, immediately, or (ii) if Designated Senior Debt of the Company or the Guarantor is outstanding and the Securities of the Series are subordinated to other indebtedness of the Company, upon the earlier of (A) ten days after such Acceleration Notice is received by the Company and (B) the acceleration of any Senior Indebtedness of the Company or the Guarantor. If an Event of Default specified in Section 8.01(7) or 8.01(8) occurs, the unpaid principal of and accrued and unpaid interest on the Securities then outstanding shall ipso facto become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Securityholder. The Holders of a majority in principal amount of the Securities of the Series by notice to the Trustee may rescind such declaration or acceleration and its consequences if all existing Events of Default have been cured or waived (except nonpayment of principal or interest that has become due solely because of the acceleration) and if the rescission would not conflict with any judgment or decree. The Company and the Guarantor (i) agree, promptly after execution of this Indenture, to notify the Trustee in writing of the Person or Persons referred to in the first sentence of this Section 8.02 and (ii) agree, promptly after any change thereof, to so notify the Trustee. Any failure by the Trustee or holders of Securities to give an Acceleration Notice to such Person or Persons will not affect the substance or validity of the Acceleration Notice provided that it is otherwise given in accordance with the first paragraph of this Section 8.02. Section 8.03 Other Remedies. If an Event of Default on a Series occurs and is continuing, the Trustee may pursue any available remedy by proceeding at law or in equity to collect the payment of principal or interest on the Series or to enforce the performance of any provisions of the Securities or this Indenture and applicable to the Series. The Trustee may maintain a proceeding even if it does not possess any of the Securities or does not produce any of them in the proceeding. A delay or omission by the Trustee or any Securityholder in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default. No remedy is exclusive of any other remedy. All available remedies are cumulative to the extent permitted by law. Section 8.04 Waiver of Past Defaults. Subject to Section 12.02, the Holders of a majority in principal amount of the Securities of a Series by notice to the Trustee may waive on behalf of all Holders of Securities of the Series an existing Default and its consequences. When a Default is waived, it is cured and stops continuing, but no such waiver shall extend to any subsequent or other Default or impair any right consequent thereon. Section 8.05 Control by Majority. The Holders of a majority in principal amount of the Securities of a Series may direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on it with respect to such Series. However, the Trustee may refuse to follow any direction that conflicts with law or this Indenture, that is unduly prejudicial to the rights of another Securityholder, or that would involve the Trustee in personal liability. 28 Section 8.06 Limitation on Suits. A Securityholder may not pursue any remedy with respect to this Indenture or the Series unless: (1) the Holder gives to the Trustee written notice of a continuing Event of Default; (2) the Holders of at least 25% in principal amount of the Securities of the Series make a written request to the Trustee to pursue the remedy; (3) such Holder or Holders offer to the Trustee indemnity satisfactory to the Trustee against any loss, liability or expense; (4) the Trustee does not comply with the request within 60 days after receipt of the request and the offer of indemnity; and (5) during such 60-day period the Holders of a majority in principal amount of the Securities do not give the Trustee a direction inconsistent with such request. A Securityholder may not use this Indenture to prejudice the rights of another Securityholder or to obtain a preference or priority over another Securityholder. Section 8.07 Rights of Holders To Receive Payment. Notwithstanding any other provisions of this Indenture, the right of any Holder of a Security to receive payment of principal of and interest on the Security, on or after the respective due dates expressed in the Security, or to bring suit for the enforcement of any such payment on or after such respective dates, shall not be impaired or affected without the consent of the Holder. Section 8.08 Collection Suit by Trustee. If an Event of Default in payment of interest or principal specified in Section 8.01(1) or (2) occurs and is continuing, the Trustee may recover judgment in its own name and as trustee of an express trust against the Company, the Guarantor or any other obligor on the Securities for the whole amount of principal and interest remaining unpaid. Section 8.09 Trustee May File Proofs of Claim. The Trustee may file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee and the Securityholders allowed in any judicial proceedings relative to the Company (or any other obligor upon the Securities, including the Guarantor), its creditors or its property. Section 8.10 Priorities. If the Trustee collects any money pursuant to this Article 8, it shall pay out the money in the following order: First: to the Trustee for amounts due under Section 9.07; Second: to the holders of Senior Indebtedness of the Company as required by Article 6 and to the holders of Senior Indebtedness of the Guarantor as required by Article 7; Third: to Securityholders of the Series for amounts due and unpaid on the Securities for principal and interest, ratably, without preference or priority of any kind, according to the amounts due and payable on the Series for principal and interest, respectively; and 29 Fourth: to the Company, or its designee. The Trustee may fix a record date and payment date for any payment to Securityholders. Section 8.11 Undertaking for Costs. In any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as Trustee, a court in its discretion may require the filing by any party litigant in the suit of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including attorneys' fees, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party litigant. This Section does not apply to a suit by the Trustee, a suit by a Holder pursuant to Section 8.07, or a suit by Holders of more than 10% in principal amount of the Securities of the Series. ARTICLE 9. TRUSTEE Section 9.01 Duties of Trustee. (a) If an Event of Default has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by this Indenture and use the same degree of care and skill in its exercise as a prudent man would exercise or use under the circumstances in the conduct of his own affairs. (b) Except during the continuance of an Event of Default: (1) The Trustee need perform only those duties that are specifically set forth in this Indenture and no others. (2) In the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture. However, the Trustee shall examine the certificates and opinions to determine whether or not they conform to the requirements of this Indenture. (c) The Trustee may not be relieved from liability for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that: (1) This paragraph does not limit the effect of paragraph (b) of this Section. (2) The Trustee shall not be liable for any error of judgment made in good faith by a Trust Officer, unless it is proved that the Trustee was negligent in ascertaining the pertinent facts. (3) The Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 8.05. 30 (d) Every provision of this Indenture that in any way relates to the Trustee is subject to paragraphs (a), (b) and (c) of this Section. (e) The Trustee may refuse to perform any duty or exercise any right or power unless it receives indemnity satisfactory to it against any loss, liability or expense. (f) The Trustee shall not be liable for interest on any money received by it except as the Trustee may agree with the Company or the Guarantor, as the case may be. (g) Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law. Section 9.02 Rights of Trustee. Subject to Section 9.01: (a) The Trustee may rely on any document believed by it to be genuine and to have been signed or presented by the proper person. The Trustee need not investigate any fact or matter stated in the document. (b) Before the Trustee acts or refrains from acting, it may require an Officers' Certificate or an Opinion of Counsel. The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on the Certificate or Opinion. (c) The Trustee may act through agents and shall not be responsible for the misconduct or negligence of any agent appointed with due care. (d) The Trustee shall not be liable for any action it takes or omits to take in good faith which it believes to be authorized or within its rights or powers. Section 9.03 Individual Rights of Trustee. The Trustee in its individual or any other capacity may become the owner or pledgee of Securities and may otherwise deal with the Company or its affiliates with the same rights it would have if it were not Trustee. Any Paying Agent, Registrar or co-registrar may do the same with like rights. However, the Trustee must comply with Sections 9.10 and 9.11. Section 9.04 Trustee Disclaimer. The Trustee makes no representation as to the validity or adequacy of this Indenture or the Securities, it shall not be accountable for the Company's use of the proceeds from the Securities, and it shall not be responsible for any statement in the Securities other than its certificate of authentication. Section 9.05 Notice of Defaults. If a Default on a Series occurs and is continuing and if it is known to the Trustee, the Trustee shall mail to each Securityholder notice of the Default within 90 days after it occurs. Except in the case of a default in payment of principal or interest on a Series, the Trustee may withhold the notice if and so long as a committee of its Trust Officers in good faith determines that withholding the notice is in the interests of Securityholders of the Series. Section 9.06 Reports by Trustee to Holders. Within 60 days after each May 15 beginning with the May 15 following the date of this Indenture, the Trustee shall mail to each Securityholder, if required by TIA Section 313(a), a brief report dated as of such May 15 that complies with TIA Section 313(a). The Trustee also shall comply with TIA Section 313(b) and Section 313(c). 31 A copy of each report at the time of its mailing to Securityholders shall be filed with the SEC and each stock exchange on which the Securities are listed. The Company shall notify the Trustee when the Securities have been listed on any securities exchange. Section 9.07 Compensation and Indemnity. The Company and the Guarantor shall pay to the Trustee from time to time reasonable compensation for its services. The Trustee's compensation hereunder shall not be limited by any law on compensation relating to the trustee of an express trust. The Company and the Guarantor shall reimburse the Trustee upon request for all reasonable out-of-pocket expenses incurred by it. Such expenses shall include the reasonable compensation and expenses of the Trustee's agents and counsel. The Company and the Guarantor shall indemnify and hold harmless the Trustee against any loss or liability incurred by it in the acceptance or administration of this trust or the performance of its duties hereunder. The Trustee shall notify the Company and the Guarantor promptly of any claim for which it may seek indemnity. The Company and the Guarantor shall defend the claim and the Trustee shall cooperate in the defense. In the event that counsel to the Trustee shall advise counsel to the Company and the Guarantor that there may be defenses reasonably available to the Trustee different than or additional to those available to the Company and the Guarantor, then in such event the Trustee shall be permitted to employ counsel of its choosing at the expense of the Company and the Guarantor. The Company and the Guarantor need not pay for any settlement made without their consent. The Company and the Guarantor need not reimburse any expense or indemnify against any loss or liability incurred by the Trustee through negligence, bad faith or with willful misconduct. The indemnity contained in this Section 9.07 shall survive the resignation or removal of the Trustee and the termination of this Indenture. To ensure the Company's and the Guarantor's payment obligations in this Section, the Trustee shall have a claim prior to the Securities on all money or property held or collected by the Trustee, except that held in trust to pay principal and interest on particular Securities. When the Trustee incurs expenses or renders services after an Event of Default specified in Section 8.01(7) or (8) occurs, the expenses and the compensation for the services are intended to constitute expenses of administration under any Bankruptcy Law. Section 9.08 Replacement of Trustee. The Trustee may resign by so notifying the Company. The Holders of a majority in principal amount of the Securities may remove the Trustee by so notifying the Trustee to be removed and may appoint a successor Trustee with the Company's and the Guarantor's consent. The Company or the Guarantor may remove the Trustee if: (1) the Trustee fails to comply with Section 9.10; (2) the Trustee is adjudged a bankrupt or an insolvent; (3) a receiver or other public officer takes charge of the Trustee or its property; or 32 (4) the Trustee becomes incapable of acting. If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for any reason, the Company shall promptly appoint a successor Trustee. A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Company. Immediately after that, the retiring Trustee shall transfer all property held by it as Trustee to the successor Trustee (subject to the prior claim provided by Section 9.07). Any resignation or removal of the Trustee and any appointment of a successor Trustee shall become effective upon acceptance of appointment by the successor Trustee. The successor Trustee shall have all the rights, powers and duties of the Trustee under this Indenture. A successor Trustee shall mail notice of its succession to each Securityholder. If a successor Trustee does not take office within 60 days after the retiring Trustee resigns or is removed, the retiring Trustee (at the expense of the Company), the Company or the Holders of a majority in principal amount of the Securities may petition any court of competent jurisdiction for the appointment of a successor Trustee. If the Trustee fails to comply with Section 9.10, any Securityholder may, subject to Section 8.11, petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee. Section 9.09 Successor Trustee by Merger, etc. If the Trustee consolidates with, merges or converts into, or transfers all or substantially all of its corporate trust assets to, another corporation, the resulting, surviving or transferee corporation without any further act shall be the successor Trustee. Section 9.10 Eligibility; Disqualification. This Indenture shall always have a Trustee who satisfies the requirements of TIA Section 310(a)(1). The Trustee shall have a combined capital and surplus of at least $15,000,000 as set forth in the most recent published annual report of condition. The Trustee shall comply with TIA Section 310(b). Section 9.11 Preferential Collection of Claims Against Company. The Trustee shall comply with TIA Section 311(a), excluding any creditor relationship listed in TIA Section 311(b). A Trustee who has resigned or been removed shall be subject to TIA Section 311(a) to the extent indicated. ARTICLE 10. CONVERSION OF SECURITIES Section 10.01 Applicability of Article. Securities of any Series which are convertible into Common Stock at the option of the Holder shall be convertible in accordance with their terms and unless the Authorizing Resolution provides otherwise, in accordance with this Article. Each reference in this Article 10 to "a Security" or "the Securities" refers to the Securities of the particular Series that is convertible into Common Stock. If more than one Series of Securities with conversion privileges are outstanding at any time, the provisions of this Article 10 shall be applied separately to each such Series. 33 Section 10.02 Conversion Privilege. Subject to and upon compliance with the provisions of this Article 10, the Holder of any Security so designated shall have the right, at its, his or her option, at any time prior to the close of business on the date specified in the Securities of such Series (or if such Security or portion thereof is called for redemption prior to such date, then in respect of such Security or portion thereof to and including but not after the close of business on the second day (or, if such day is not a Business Day, then on the next following Business Day) preceding the date fixed for such redemption) to convert the principal amount of any such Security, or any portion of such principal amount which is $1,000 or an integral multiple thereof, into that number of fully paid and non-assessable shares of the Guarantor's Common Stock (calculated as to each conversion to the nearest 1/100th of a share) obtained by dividing the principal amount of the Security or portion thereof to be converted by the Conversion Price and by surrender of the Security so to be converted in whole or in part, such surrender to be made in the manner provided in Section 10.03. Notwithstanding the previous sentence, if the Company shall fail to redeem a Security which has been called for redemption, the Holder of such Security shall retain the right to convert such Security as provided in this Article 10. Section 10.03 Manner of Exercise of Conversion Privilege. In order to exercise a conversion privilege, the Holder of any Security to be converted in whole or in part shall surrender such Security at any of the offices or agencies to be maintained for such purpose by the Company pursuant to Section 2.03, and shall give notice to the Company and the Guarantor in the form provided in the Security, duly executed, at such office or agency that the Holder elects to convert such Security or the portion thereof specified in said notice. Such notice shall also state the name or names, together with the address or addresses, in which the certificate or certificates for shares of Common Stock which shall be issuable on such conversion shall be issued. Each Security surrendered for conversion shall, unless the shares issuable on conversion are to be issued in the same name as the name in which such Security is registered, be accompanied by instruments of transfer, in form satisfactory to the Guarantor, duly executed by the Holder or its, his or her duly authorized attorney. Securities so surrendered during the period from the close of business on a Record Date, or the next preceding Business Day if such Record Date is not a Business Day, preceding any Interest Payment Date to the opening of business on such Interest Payment Date (excluding Securities or portions thereof called for redemption during such period) shall also be accompanied by payment in next-day funds or other funds acceptable to the Guarantor of an amount equal to the interest payable on such Interest Payment Date on the principal amount of such Security then being converted; provided, however, that, if the Company shall default on the payment of said interest, said funds shall be returnable to the payor thereof. As promptly as practicable after the surrender of such Security, as aforesaid, the Guarantor shall issue and shall deliver at such office or agency to such Holder, or on its, his or her written order, a certificate or certificates for the number of full shares of Common Stock issuable upon the conversion of such Security or portion thereof in accordance with the provisions of this Article 10 and any fractional interest in respect of a share of Common Stock arising upon such conversion shall be settled as provided in Section 10.04. In case any Security of a denomination greater than $1,000 shall be surrendered for partial conversion, the Company and the Guarantor shall execute and the Trustee shall authenticate and deliver to or upon the order of the Holder of the Security so surrendered, at the expense of the Company, a new Security or Securities and Guarantee or Guarantees in authorized denominations in an aggregate principal amount equal to the unconverted portion of the surrendered Security. Such conversion shall be deemed 34 to have been effected immediately prior to the close of business on the date on which such Security shall have been surrendered and such notice received by the Company and the Guarantor as aforesaid, and the Person or Persons in whose name or names any certificate or certificates for shares of Common Stock shall be issuable upon such conversion shall be deemed to have become the holder or holders of record of the shares represented thereby at such time and such conversion shall be at the Conversion Price in effect at such time, unless the stock transfer books of the Guarantor shall be closed on that date, in which event such Person or Persons shall be deemed to have become such holder or holders of record at the close of business on the next succeeding day on which such stock transfer books are open, but such conversion shall be at the Conversion Price in effect on the date upon which such Security shall have been surrendered and such notice received by the Company and the Guarantor. Subject to the aforesaid requirement for a payment in the event of conversion after the close of business on a Record Date preceding an Interest Payment Date, no payment or adjustment shall be made on conversion for interest accrued on the Securities surrendered for conversion or for dividends on the Common Stock delivered on such conversion. Section 10.04 Payment in Lieu of Fractional Shares. No fractional shares of Common Stock shall be issued upon conversion of the Securities. Instead of any fractional interest in a share of Common Stock which would otherwise be deliverable upon the conversion of any Security or Securities, the Company and/or the Guarantor shall make an adjustment therefor to the nearest 1/100th of a share in cash at the Current Market Price thereof at the close of business on the Business Day next preceding the day of conversion. If more than one Security shall be surrendered for conversion at one time by the same Holder, the number of full shares issuable upon conversion thereof shall be computed on the basis of the aggregate principal amount of the Securities, or specified portions thereof to be converted, so surrendered. Section 10.05 Adjustment of Conversion Price. The Conversion Price shall be adjusted from time to time as follows: (a) In case the Guarantor shall hereafter (i) pay a dividend or make a distribution on its Common Stock in shares of Common Stock, (ii) subdivide its outstanding shares of Common Stock into a greater number of shares, (iii) combine its outstanding shares of Common Stock into a smaller number of shares, or (iv) issue by reclassification of its Common Stock any shares of Capital Stock of the Guarantor, the Conversion Price in effect immediately prior to such action shall be adjusted so that the Holder of any Security thereafter surrendered for conversion shall be entitled to receive the number of shares of Common Stock or other Capital Stock of the Guarantor which he would have owned immediately following such action had such Security been converted immediately prior thereto. An adjustment made pursuant to this subsection (a) shall become effective immediately after the record date in the case of a dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or reclassification. If, as a result of an adjustment made pursuant to this subsection (a), the Holder of any Security thereafter surrendered for conversion shall become entitled to receive shares of two or more classes of Capital Stock or shares of Common Stock and other Capital Stock of the Guarantor, the Board of Directors (whose determination shall be conclusive and shall be described in a statement filed with the Trustee and with the Registrar) shall determine in an equitable manner the allocation of the adjusted Conversion Price between or among shares of such classes of Capital Stock or shares of Common Stock and other Capital Stock. 35 (b) In case the Guarantor shall hereafter issue rights or warrants to holders of its outstanding shares of Common Stock generally entitling them (for a period expiring within 45 days after the record date mentioned below) to subscribe for or purchase shares of Common Stock at a price per share less than the Current Market Price per share of the Common Stock on the record date mentioned below, the Conversion Price of the shares of Common Stock shall be adjusted so that the same shall equal the price determined by multiplying the Conversion Price in effect immediately prior to the date of issuance of such rights or warrants by a fraction of which the numerator shall be the number of shares of Common Stock outstanding on the date of issuance of such rights or warrants plus the number of shares which the aggregate offering price of the total number of shares so offered would purchase at such Current Market Price, and of which the denominator shall be the number of shares of Common Stock outstanding on the date of issuance of such rights or warrants plus the number of additional shares of Common Stock offered for subscription or purchase. Such adjustment shall become effective immediately after the record date for the determination of shareholders entitled to receive such rights or warrants. (c) In case the Guarantor shall hereafter distribute to holders of its outstanding Common Stock generally evidences of its indebtedness or assets (excluding any cash dividend paid from retained earnings of the Guarantor and dividends or distributions payable in stock for which adjustment is made pursuant to subsection (a) of this Section 10.05) or rights or warrants to subscribe to securities of the Guarantor (excluding those referred to in subsection (b) of this Section 10.05), then in each such case the Conversion Price of the shares of Common Stock shall be adjusted so that the same shall equal the price determined by multiplying the Conversion Price in effect immediately prior to the date of such distribution by a fraction of which the numerator shall be the Current Market Price per share of the Common Stock on the record date mentioned below less the then fair market value (as determined by the Board of Directors, whose determination shall be conclusive and shall be described in a statement filed with the Trustee and with the Registrar) of the portion of the evidences of indebtedness or assets so distributed to the holder of one share of Common Stock or of such subscription rights or warrants applicable to one share of Common Stock, and of which the denominator shall be such Current Market Price per share of Common Stock. Such adjustment shall become effective immediately after the record date for the determination of shareholders entitled to receive such distribution. (d) In any case in which this Section 10.05 shall require that an adjustment be made immediately following a record date, the Guarantor may elect to defer (but only until five Business Days following the filing by the Company with the Trustee and the Registrar of the certificate of independent public accountants described in subsection (f) of this Section 10.05) issuing to the Holder of any Security converted after such record date the shares of Common Stock issuable upon such conversion over and above the shares of Common Stock issuable upon such conversion on the basis of the Conversion Price prior to adjustment. 36 (e) No adjustment in the Conversion Price shall be required unless such adjustment would require an increase or decrease of at least 1% of such price; provided, however, that any adjustments which by reason of this subsection (e) are not required to be made shall be carried forward and taken into account in any subsequent adjustment, and provided further that adjustment shall be required and made in accordance with the provisions of this Article 10 (other than this subsection (e)), not later than such time as may be required in order to preserve the tax-free nature of a distribution to the holders of Securities or Common Stock. All calculations under this Section 10.05 shall be made to the nearest cent or to the nearest 1/100th of a share, as the case may be. Anything in this Section 10.05 to the contrary notwithstanding, the Guarantor shall be entitled to make such reductions in the Conversion Price, in addition to those required by this Section 10.05, as it in its discretion shall determine to be advisable in order that any stock dividend, subdivision of shares, distribution of rights to purchase stock or securities, or distribution of securities convertible into or exchangeable for stock hereafter made by the Guarantor to its shareholders shall not be taxable. (f) Whenever the Conversion Price is adjusted as herein provided, (i) the Company and the Guarantor shall promptly file with the Trustee and the Registrar a certificate of a firm of independent public accountants setting forth the Conversion Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment and the manner of computing the same, which certificate shall be conclusive evidence of the correctness of such adjustment and (ii) a notice stating that the Conversion Price has been adjusted and setting forth the adjusted Conversion Price shall forthwith be given by the Company and the Guarantor to the Holders in the manner provided in Section 13.02. Subject to TIA Section 315(a), (c) and (d), the Trustee and any conversion agent shall be under no duty or responsibility with respect to any such certificate or the certificate provided for in Section 10.10 except to exhibit the same from time to time to any Holder of a Security desiring an inspection of such certificate. (g) In the event that at any time as a result of an adjustment made pursuant to subsection (a) of this Section 10.05, the Holder of any Security thereafter surrendered for conversion shall become entitled to receive any shares of the Guarantor other than shares of Common Stock, thereafter the Conversion Price of such other shares so receivable upon conversion of any Security shall be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to Common Stock contained in this Article 10. Section 10.06 Notice of Certain Corporate Action. In the event: (a) the Guarantor shall take any action which would require an adjustment in the Conversion Price pursuant to Section 10.05(c); or (b) the Guarantor shall authorize the granting to the holders of its Common Stock (as a class) of rights or warrants to subscribe for or purchase any shares of stock of any class or of any other rights; or (c) there shall be any capital reorganization or reclassification of the Common Stock (other than a subdivision or combination of the outstanding Common Stock and other than a change in the par value of the Common Stock), or any consolidation or merger to which the Guarantor is a party or any statutory exchange of securities with another corporation and for which approval of any shareholders of the Guarantor is required, or any sale or transfer of all or substantially all of the assets of the Guarantor; or 37 (d) there shall be a voluntary or involuntary dissolution, liquidation or winding-up of the Guarantor; then the Company and the Guarantor shall cause to be filed with the Trustee and the Registrar, and shall cause to be given to the Holders, in the manner provided in Section 13.02, at least 14 days prior to the applicable date hereinafter specified, a notice stating (i) the date on which a record is to be taken for the purpose of such distribution or rights, or, if a record is not to be taken, the date as of which the holders of Common Stock of record to be entitled to such distribution or rights are to be determined, or (ii) the date on which such reorganization, reclassification, consolidation, merger, sale, transfer, dissolution, liquidation or winding-up is expected to become effective, and the date as of which it is expected that holders of Common Stock of record shall be entitled to exchange their shares of Common Stock for securities or other property deliverable upon such reorganization, reclassification, consolidation, merger, sale, transfer, dissolution, liquidation or winding-up. Failure to give such notice or any defect therein shall not affect the legality or validity of the proceedings described in subsection (a), (b), (c) or (d) of this Section 10.06. Section 10.07 Guarantor To Provide Stock. The Guarantor covenants that it will at all times reserve and keep available, free from preemptive rights, out of the aggregate of its authorized but unissued shares of Common Stock or its issued shares of Common Stock held in its treasury, or both, for the purpose of effecting conversions of Securities, the full number of shares of Common Stock deliverable upon the conversion of all outstanding Securities not theretofore converted. For purposes of this Section 10.07, the number of shares of Common Stock which shall be deliverable upon the conversion of all outstanding Securities shall be computed as if at the time of computation all outstanding Securities were held by a single Holder. Before taking any action which would cause an adjustment reducing the Conversion Price below the then par value (if any) of the shares of Common Stock deliverable upon conversions of the Securities, the Guarantor will take any corporate action which may, in the opinion of its counsel, be necessary in order that the Guarantor may validly and legally issue fully paid and non-assessable shares of Common Stock at such adjusted Conversion Price. The Guarantor will endeavor to list the shares of Common Stock required to be delivered upon conversion of Securities prior to such delivery upon each national securities exchange, if any, upon which the outstanding Common Stock is listed at the time of such delivery. Prior to the delivery of any securities which the Guarantor shall be obligated to deliver upon conversion of the Securities, the Guarantor will endeavor to comply with all federal and state laws and regulations thereunder requiring the registration of such securities with, or any approval of or consent to the delivery thereof by, any governmental authority. Section 10.08 Taxes on Conversions. The Company and/or the Guarantor will pay any and all documentary stamp or similar issue or transfer taxes payable in respect of the issue or delivery of shares of Common Stock on conversions of Securities pursuant hereto; provided, however, that neither the Company nor the Guarantor shall be required to pay any tax which may be payable in respect of any transfer involved in the issue or delivery of shares of Common Stock in a name other than that of the Holder of the Securities to be converted and no such issue or delivery shall be made unless and until the person requesting such issue or delivery has paid to the Company and/or the Guarantor the amount of any such tax or has established, to the satisfaction of the Company and the Guarantor, that such tax has been paid. 38 Section 10.09 Covenant as to Stock. The Guarantor covenants that all shares of Common Stock which may be delivered upon conversions of Securities will upon delivery be duly and validly issued and fully paid and non-assessable, free of all liens and charges and not subject to any preemptive rights. Section 10.10 Consolidation or Merger. Notwithstanding any other provision herein to the contrary, in case of any consolidation or merger to which the Guarantor is a party other than a merger or consolidation in which the Guarantor is the continuing corporation, or in case of any sale or conveyance to another corporation of the property of the Guarantor as an entirety or substantially as an entirety, or in the case of any statutory exchange of securities with another corporation (including any exchange effected in connection with a merger of a third corporation into the Guarantor), there shall be no adjustments under Section 10.05 but the Holder of each Security then outstanding shall have the right thereafter to convert such Security into the kind and amount of securities, cash or other property which he would have owned or have been entitled to receive immediately after such consolidation, merger, statutory exchange, sale or conveyance had such Security been converted immediately prior to the effective date of such consolidation, merger, statutory exchange, sale or conveyance and in any such case, if necessary, appropriate adjustment shall be made in the application of the provisions set forth in this Article 10 with respect to the rights and interests thereafter of the Holders of the Securities, to the end that the provisions set forth in this Article 10 shall thereafter correspondingly be made applicable, as nearly as may reasonably be, in relation to any shares of stock or other securities or property thereafter deliverable on the conversion of the Securities. Any such adjustment shall be made by and set forth in a supplemental indenture executed by the Company, the Guarantor and the Trustee and approved by a firm of independent public accountants, evidenced by a certificate to that effect; and any adjustment so approved shall for all purposes hereof conclusively be deemed to be an appropriate adjustment. The above provisions of this Section 10.10 shall similarly apply to successive consolidations, mergers, statutory exchanges, sales or conveyances. The Company shall give notice of the execution of such a supplemental indenture to the Holders of Securities in the manner provided in Section 13.02 within 30 days after the execution thereof. The Trustee shall not be under any responsibility to determine the correctness of any provisions contained in such supplemental indenture relating either to the kind or amount of shares of stock or securities or property receivable by Holders upon the conversion of their Securities after any such consolidation, merger, statutory exchange, sale or conveyance, or to any adjustment to be made with respect thereto. 39 Section 10.11 Disclaimer of Responsibility for Certain Matters. Neither the Trustee nor the Registrar shall at any time be under any duty or responsibility to any Holder of Securities to determine whether any facts exist which may require any adjustment of the Conversion Price, or with respect to the nature or extent of any such adjustment when made, or with respect to the method employed, or herein or in any supplemental indenture provided to be employed, in making the same. Neither the Trustee nor the Registrar shall be accountable with respect to the listing or registration referred to in Section 10.07 or the validity or value (or the kind or amount) of any shares of Common Stock, or of any securities or property, which may at any time be issued or delivered upon the conversion of any Security; and neither the Trustee nor the Registrar makes any representation with respect thereto. Neither the Trustee nor the Registrar shall be responsible for any failure of the Guarantor to issue, transfer or deliver any shares of Common Stock or stock certificates or other securities or property or to make any cash payment upon the surrender of any Security for the purpose of conversion or, subject to TIA Section 315(a), (c) and (d), to comply with any of the covenants contained in this Article 10. ARTICLE 11. DISCHARGE OF INDENTURE Section 11.01 Termination of the Company's and the Guarantor's Obligations. Securities of a Series may be defeased in accordance with their terms and, unless the Authorizing Resolution provides otherwise, in accordance with this Article. The Company may terminate all of its obligations under the Securities of a Series and this Indenture, to the extent its obligations under this Indenture relate to that Series, and the obligations of the Guarantor shall terminate if all Securities of a Series previously authenticated and delivered (other than destroyed, lost or stolen Securities which have been replaced or paid) have been delivered to the Trustee for cancellation or if: (1) the Securities mature within one year or all of them are to be called for redemption within one year under arrangements satisfactory to the Trustee for giving the notice of redemption; and (2) the Company irrevocably deposits in trust with the Trustee money sufficient to pay principal of and interest on the outstanding Securities to maturity or redemption, as the case may be. The Company may make the deposit only if Article 6 permits it. Immediately after making the deposit, the Company shall give notice of such event and proposed date of payment to each Securityholder. The Company's obligations and, to the extent applicable, the Guarantor's obligations, in Sections 2.05, 2.06, 2.07, 2.08, 2.09, 4.01, 9.07, 9.08 and 11.03 and Article 10, however, shall survive until the Securities are no longer outstanding. Thereafter, the Company's obligations and, to the extent applicable, the Guarantor's obligations, in Sections 9.07 and 11.03 shall survive. After a deposit, the Trustee upon request shall acknowledge in writing the discharge of the Company's obligations under the Securities, the Guarantor's obligations under the Guarantee and their obligations under the Indenture except for those surviving obligations specified above. 40 Section 11.02 Application of Trust Money. The Trustee shall hold in trust money deposited with it pursuant to Section 11.01. It shall apply the deposited money through the Paying Agent and in accordance with this Indenture to the payment of principal and interest on the Securities. Section 11.03 Repayment to Company. The Trustee and the Paying Agent shall promptly pay to the Company upon request any excess money held by them at any time. The Trustee and the Paying Agent shall pay to the Company upon request any money held by them for the payment of principal or interest (including interest, if any, earned on such money) that remains unclaimed for two years; provided, however, that the Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of the Company cause to be published once in a newspaper of general circulation in The City of New York or mail to each Holder notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such publication or mailing, any unclaimed balance of such money then remaining will be repaid to the Company. After payment to the Company, Securityholders entitled to any of such money must look to the Company or, if applicable, the Guarantor for payment as general creditors unless applicable abandoned property law designates another person and all liability of the Trustee or Paying Agent with respect to such money shall thereupon cease. ARTICLE 12. AMENDMENTS, SUPPLEMENTS AND WAIVERS Section 12.01 Without Consent of Holders. The Company may amend or supplement this Indenture or the Securities without notice to or consent of any Securityholder: (1) to cure any ambiguity, defect or inconsistency; (2) to comply with Section 5.01; (3) to provide for uncertificated Securities in addition to or in place of certificated Securities; or (4) to make any change that does not adversely affect the rights of any Securityholder. Section 12.02 With Consent of Holders. The Company may amend or supplement this Indenture or the Securities without notice to any Securityholder but with the written consent of the Holders of at least a majority in principal amount of the Securities of all Series affected by the amendment voting as a class. The Holders of a majority in principal amount of the Securities may waive compliance by the Company with any provision of this Indenture or the Securities without notice to any Securityholder. However, without the consent of each Securityholder affected, an amendment, supplement or waiver, including a waiver pursuant to Section 8.04, may not: (1) reduce the amount of Securities whose Holders must consent to an amendment, supplement or waiver; 41 (2) reduce the rate of or extend the time for payment of interest on any Security; (3) reduce the principal of or extend the fixed maturity of any Security or alter the redemption provisions with respect thereto; (4) waive a default in the payment of the principal of or interest on any Security; (5) modify the provisions of Article 6 (subordination) or Article 7 (guarantee) in a manner adverse to the Holders; (6) make any security payable in money other than that stated in the Security; (7) if applicable, make any change that adversely affects the right to convert or the Conversion Price for any Security; or (8) make any change in Section 8.04 or 8.07 or this Section 12.02. After an amendment under this Section 12.02 becomes effective, the Company shall mail to the Holders a notice briefly describing the amendment. Section 12.03 Compliance with Trust Indenture Act. Every amendment to or supplement of this Indenture or the Securities shall comply with the TIA as then in effect. Section 12.04 Revocation and Effect of Consents. A consent to an amendment, supplement or waiver by a Holder of a Security shall bind the Holder and every subsequent Holder of a Security or portion of a Security that evidences the same debt as the consenting Holder's Security, even if notation of the consent is not made on any Security. However, any such Holder or subsequent Holder may revoke the consent as to the Security or portion of a Security of such Holder. The Trustee must receive the notice of revocation before the date the amendment, supplement or waiver becomes effective. After an amendment, supplement or waiver becomes effective, it shall bind every Securityholder unless it makes a change described in clauses (1) through (8) of Section 12.02. In that case the amendment, supplement or waiver shall bind each Holder of a Security who has consented to it and every subsequent Holder of a Security or portion of a Security that evidences the same debt as the consenting Holder's Security. Section 12.05 Notation on or Exchange of Securities. If an amendment, supplement or waiver changes the terms of a Security, the Trustee may require the Holder of the Security to deliver it to the Trustee. The Trustee may place an appropriate notation on the Security about the changed terms and return it to the Holder. Alternatively, if the Company or the Trustee so determine, the Company in exchange for the Security shall issue and the Trustee shall authenticate, a new Security that reflects the changed terms. 42 Section 12.06 Trustee To Sign Amendments, etc. The Trustee shall sign any amendment, supplement or waiver authorized pursuant to this Article if the amendment, supplement or waiver does not adversely affect the rights or duties of the Trustee. If it does, the Trustee may but need not sign it. In signing any amendment, supplement or waiver, the trustee may rely on an Opinion of Counsel which shall state that such amendment, supplement or waiver is permitted under this Article 12. ARTICLE 13. MISCELLANEOUS Section 13.01 Trust Indenture Act Controls. If any provision of this Indenture limits, qualifies, or conflicts with another provision which is required to be included in this Indenture by the TIA or the TIA as amended after the date hereof, the required provision shall control. Section 13.02 Notices. Any notice or communication shall be sufficiently given if in writing and delivered in person or mailed by first-class mail addressed as follows: if to the Company or the Guarantor: Toll Brothers, Inc., 3103 Philmont Avenue, Huntingdon Valley, Pennsylvania 19006 Attention: Chief Financial Officer with a copy to: Mark K. Kessler, Esquire Wolf, Block, Schorr and Solis-Cohen LLP 1650 Arch Street, 22nd Floor Philadelphia, PA 19103-2097 if to the Trustee: Bank One Trust Company, NA 1111 Polaris Parkway, Suite 1K Columbus, OH 43420 Attention: Corporate Trust Securities Division The Company, the Guarantor or the Trustee by notice to the other may designate additional or different addresses for subsequent notices or communications. Any notice or communication mailed to a Securityholder shall be mailed to him at his address as it appears on the registration books of the Registrar and shall be sufficiently given to him if so mailed within the time prescribed. In addition, a copy of each such notice or communication shall be mailed to the Trustee at the address specified above. Failure to mail a notice or communication to a Securityholder or any defect in it shall not affect its sufficiency with respect to other Securityholders. If a notice or communication is mailed in the manner provided above, it is duly given, whether or not the addressee receives it. If the Company or the Guarantor mails a notice or communication to Securityholders, it shall mail a copy of such notice to the Trustee and each agent at the same time. 43 Section 13.03 Communication by Holders with Other Holders. Securityholders may communicate pursuant to TIA Section 312(b) with other Securityholders with respect to their rights under this Indenture or the Securities. The Company, the Guarantor, the Trustee, the Registrar and anyone else shall have the protection of TIA Section 312(c). Section 13.04 Certificate and Opinion as to Conditions Precedent. Upon any request or application by the Company to the Trustee to take any action under this Indenture, the Company shall furnish to the Trustee: (1) an Officers' Certificate stating that, in the opinion of the signers, all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with; and (2) an Opinion of Counsel stating that, in the opinion of such counsel, all such conditions precedent have been complied with. Section 13.05 Statements Required in Certificate or Opinion. Each certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture shall include: (1) a statement that the person making such certificate or opinion has read such covenant or condition; (2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (3) a statement that, in the opinion of such person, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and (4) a statement as to whether or not, in the opinion of such person, such condition or covenant has been complied with. Section 13.06 When Treasury Securities Disregarded. In determining whether the Holders of the required principal amount of Securities of a Series have concurred in any direction, waiver or consent, Securities of the Series owned by the Company or the Guarantor or by any person directly or indirectly controlling or controlled by or under direct or indirect common control with the Company or the guarantor shall be disregarded, except that for the purposes of determining whether the Trustee shall be protected in relying on any such direction, waiver or consent, only Securities of the Series which the Trustee knows are so owned shall be so disregarded. 44 Section 13.07 Rules by Trustee, Paying Agent, Registrar. The Trustee may make reasonable rules for action by or a meeting of Securityholders. The Paying Agent or Registrar each may make reasonable rules for its functions. Section 13.08 Legal Holidays. A "Legal Holiday" is a Saturday, a Sunday, a legal holiday or a day on which banking institutions are not required to be open. If a payment date is a Legal Holiday at a place of payment, payment may be made at that place on the next succeeding day that is not a Legal Holiday, and no interest shall accrue for the intervening period. Section 13.09 Governing Law. The laws of the State of New York shall govern this Indenture, the Securities and the Guarantee without regard to principles of conflicts of law. Section 13.10 No Adverse Interpretation of Other Agreements. This Indenture may not be used to interpret another indenture, loan or debt agreement of the Company, the Guarantor or a Subsidiary. Any such indenture, loan or debt agreement may not be used to interpret this Indenture. Section 13.11 No Recourse Against Others. All liability described in paragraph 20 of the Securities of any director, officer, employee or shareholder, as such, of the Company or the Guarantor is waived and released. Section 13.12 Successors. All agreements of the Company or the Guarantor in this Indenture and the Securities shall bind its successor. All agreements of the Trustee in this Indenture shall bind its successor. Section 13.13 Duplicate Originals. The parties may sign any number of copies of this Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. Section 13.14 Counterparts. This Indenture may be executed in any number of counterparts, all of which shall together constitute one and the same instrument. This Indenture shall become binding when one or more counterparts hereof, individually or taken together, shall bear the signatures of all of the parties reflected hereon as the signatories. 45 SIGNATURES Dated: FIRST HUNTINGDON FINANCE CORP., as Issuer By: ------------------------------------------ Name: (SEAL) Title: Attest: - ------------------------- Name: Title: Dated: TOLL BROTHERS, INC., as Guarantor By: ------------------------------------------ Name: (SEAL) Title: Attest: - ------------------------- Name: Title: Dated: BANK ONE TRUST COMPANY, NA, as Trustee By: ------------------------------------------ Name: (SEAL) Title: Attest: - ------------------------- Name: Title: S-1 EX-4.3 5 b317330_ex4-3.txt EXHIBIT 4.3 EXHIBIT 4.3 TOLL FINANCE CORP., as Issuer TOLL BROTHERS, INC., as Guarantor Debt Securities Indenture Dated as of ___________________ BANK ONE TRUST COMPANY, NA, as Trustee CROSS-REFERENCE TABLE TIA Indenture Section Section - ------- ------- 310(a)(1)................................................ 9.10 (a)(2)................................................... 9.10 (a)(3)................................................... N.A. (a)(4)................................................... N.A. (b)...................................................... 9.08; 9.10; 13.02 (c)...................................................... N.A. 311(a)................................................... 9.11 (b)...................................................... 9.11 (c)...................................................... N.A. 312(a)................................................... 2.07 (b)...................................................... 13.03 (c)...................................................... 13.03 313(a)................................................... 9.06 (b)(1)................................................... N.A. (b)(2)................................................... 9.06 (c)...................................................... 9.06; 13.02 (d)...................................................... 9.06 314(a)................................................... 4.03; 13.02 (b)...................................................... N.A. (c)(1)................................................... 13.04 (c)(2)................................................... 13.04 (c)(3)................................................... N.A. (d)...................................................... N.A. (e)...................................................... 13.05 (f)...................................................... N.A. 315(a)................................................... 9.01(b) (b)...................................................... 9.05; 13.02 (c)...................................................... 9.01(a) (d)...................................................... 9.01(c) (e)...................................................... 8.11 316(a)(last sentence).................................... 13.06 (a)(1)(A)................................................ 8.05 (a)(1)(B)................................................ 8.04 (a)(2)................................................... N.A. (b)...................................................... 8.07 317(a)(1)................................................ 8.08 (a)(2)................................................... 8.09 (b)...................................................... 2.06 318(a)................................................... 13.01 N.A. means Not Applicable. Note: This cross-reference table shall not, for any purpose, be deemed to be a part of the Indenture. TABLE OF CONTENTS
Page ---- ARTICLE 1. DEFINITIONS AND INCORPORATION BY REFERENCE Section 1.01 Definitions............................................................................1 Section 1.02 Incorporation by Reference of Trust Indenture Act......................................5 Section 1.03 Incorporation by Reference of Provisions of Securities.................................6 Section 1.04 Rules of Construction..................................................................6 ARTICLE 2. THE SECURITIES Section 2.01 Forms Generally........................................................................6 Section 2.02 Form of Trustee's Certificate of Authentication........................................6 Section 2.03 Amount Unlimited, Issuable in Series...................................................7 Section 2.04 Execution and Authentication...........................................................8 Section 2.05 Registrar and Paying Agent.............................................................9 Section 2.06 Paying Agent To Hold Money in Trust....................................................9 Section 2.07 Securityholder Lists..................................................................10 Section 2.08 Transfer and Exchange.................................................................10 Section 2.09 Replacement Securities................................................................10 Section 2.10 Outstanding Securities................................................................10 Section 2.11 Temporary Securities..................................................................11 Section 2.12 Cancellation..........................................................................11 Section 2.13 Defaulted Interest....................................................................11 Section 2.14 Global Securities.....................................................................12 ARTICLE 3. REDEMPTION Section 3.01 Notices to Trustee....................................................................12 Section 3.02 Selection of Securities To Be Redeemed................................................13 Section 3.03 Notice of Redemption..................................................................13 Section 3.04 Effect of Notice of Redemption........................................................13 Section 3.05 Deposit of Redemption Price...........................................................14 Section 3.06 Securities Redeemed in Part...........................................................14 -i- ARTICLE 4. COVENANTS Section 4.01 Payment of Securities.................................................................14 Section 4.02 SEC Reports...........................................................................14 Section 4.03 Compliance Certificate................................................................14 ARTICLE 5. SUCCESSOR CORPORATION Section 5.01 When the Company and the Guarantor May Merge, etc.....................................15 ARTICLE 6. SUBORDINATION Section 6.01 Agreement To Subordinate..............................................................15 Section 6.02 Company Not To Make Payments with Respect to Securities in Certain Circumstances.........................................................................15 Section 6.03 Securities Subordinated to Prior Payment of All Senior Indebtedness of the Company on Dissolution, Liquidation or Reorganization of the Company..................16 Section 6.04 Securityholders To Be Subrogated to Rights of Holders of Senior Indebtedness of the Company........................................................................17 Section 6.05 Obligation of the Company Unconditional...............................................17 Section 6.06 Knowledge of Trustee..................................................................18 Section 6.07 Application by Trustee of Monies Deposited With It....................................18 Section 6.08 Subordination Rights Not Impaired by Acts or Omissions of Company or Holders of Senior Indebtedness of the Company.................................................18 Section 6.09 Securityholders Authorize Trustee To Effectuate Subordination of Securities...........19 Section 6.10 Right of Trustee To Hold Senior Indebtedness of the Company...........................19 Section 6.11 Article Six Not To Prevent Events of Default..........................................19 ARTICLE 7. GUARANTEE Section 7.01 Guarantee.............................................................................19 Section 7.02 Agreement To Subordinate..............................................................20 Section 7.03 Guarantor Not To Make Payments with Respect to Securities in Certain Circumstances.........................................................................21 Section 7.04 Guarantee Subordinated to Prior Payment of All Senior Indebtedness of the Guarantor on Dissolution, Liquidation or Reorganization of the Guarantor..............22 -ii- Section 7.05 Securityholders To Be Subrogated to Rights of Holders of Senior Indebtedness of the Guarantor......................................................................23 Section 7.06 Obligation of the Guarantor Unconditional.............................................23 Section 7.07 Knowledge of Trustee..................................................................24 Section 7.08 Application by Trustee of Monies Deposited With It....................................24 Section 7.09 Subordination Rights Not Impaired by Acts or Omissions of Guarantor or Holders of Senior Indebtedness of the Guarantor.......................................24 Section 7.10 Securityholders Authorize Trustee To Effectuate Subordination of Guarantee............24 Section 7.11 Right of Trustee To Hold Senior Indebtedness of the Guarantor.........................25 Section 7.12 Article 7 Not To Prevent Events of Default............................................25 Section 7.13 Execution and Delivery of Guarantee...................................................25 Section 7.14 Subordination of Indebtedness Owed by the Company to the Guarantor....................25 Section 7.15 Officers' Certificate.................................................................25 ARTICLE 8. DEFAULTS AND REMEDIES Section 8.01 Events of Default.....................................................................26 Section 8.02 Acceleration..........................................................................27 Section 8.03 Other Remedies........................................................................28 Section 8.04 Waiver of Past Defaults...............................................................28 Section 8.05 Control by Majority...................................................................28 Section 8.06 Limitation on Suits...................................................................28 Section 8.07 Rights of Holders To Receive Payment..................................................29 Section 8.08 Collection Suit by Trustee............................................................29 Section 8.09 Trustee May File Proofs of Claim......................................................29 Section 8.10 Priorities............................................................................29 Section 8.11 Undertaking for Costs.................................................................30 ARTICLE 9. TRUSTEE Section 9.01 Duties of Trustee.....................................................................30 Section 9.02 Rights of Trustee.....................................................................31 Section 9.03 Individual Rights of Trustee..........................................................31 Section 9.04 Trustee Disclaimer....................................................................31 Section 9.05 Notice of Defaults....................................................................31 Section 9.06 Reports by Trustee to Holders.........................................................31 Section 9.07 Compensation and Indemnity............................................................32 Section 9.08 Replacement of Trustee................................................................32 Section 9.09 Successor Trustee by Merger, etc......................................................33 Section 9.10 Eligibility; Disqualification.........................................................33 Section 9.11 Preferential Collection of Claims Against Company.....................................33 ARTICLE 10. CONVERSION OF SECURITIES Section 10.01 Applicability of Article..............................................................33 Section 10.02 Conversion Privilege..................................................................34 Section 10.03 Manner of Exercise of Conversion Privilege............................................34 Section 10.04 Payment in Lieu of Fractional Shares..................................................35 Section 10.05 Adjustment of Conversion Price........................................................35 Section 10.06 Notice of Certain Corporate Action....................................................37 Section 10.07 Guarantor To Provide Stock............................................................38 Section 10.08 Taxes on Conversions..................................................................38 Section 10.09 Covenant as to Stock..................................................................39 Section 10.10 Consolidation or Merger...............................................................39 Section 10.11 Disclaimer of Responsibility for Certain Matters......................................39 ARTICLE 11. DISCHARGE OF INDENTURE Section 11.01 Termination of the Company's and the Guarantor's Obligations..........................40 Section 11.02 Application of Trust Money............................................................41 Section 11.03 Repayment to Company..................................................................41 ARTICLE 12. AMENDMENTS, SUPPLEMENTS AND WAIVERS Section 12.01 Without Consent of Holders............................................................41 Section 12.02 With Consent of Holders...............................................................41 Section 12.03 Compliance with Trust Indenture Act...................................................42 Section 12.04 Revocation and Effect of Consents.....................................................42 Section 12.05 Notation on or Exchange of Securities.................................................42 Section 12.06 Trustee To Sign Amendments, etc.......................................................43 ARTICLE 13. MISCELLANEOUS Section 13.01 Trust Indenture Act Controls..........................................................43 Section 13.02 Notices...............................................................................43 Section 13.03 Communication by Holders with Other Holders...........................................44 Section 13.04 Certificate and Opinion as to Conditions Precedent....................................44 Section 13.05 Statements Required in Certificate or Opinion.........................................44 Section 13.06 When Treasury Securities Disregarded..................................................44 Section 13.07 Rules by Trustee, Paying Agent, Registrar.............................................45 Section 13.08 Legal Holidays........................................................................45 -iv- Section 13.09 Governing Law.........................................................................45 Section 13.10 No Adverse Interpretation of Other Agreements.........................................45 Section 13.11 No Recourse Against Others............................................................45 Section 13.12 Successors............................................................................45 Section 13.13 Duplicate Originals...................................................................45 Section 13.14 Counterparts..........................................................................45 SIGNATURES................................................................................................. S-1
-v- INDENTURE dated as of ____________________ among TOLL FINANCE CORP., a Delaware corporation (the "Company"), TOLL BROTHERS, INC., a Delaware corporation (the "Guarantor"), and BANK ONE TRUST COMPANY, NA, a national banking association (the "Trustee"). The Company has duly authorized the execution and delivery of this Indenture to provide for the issuance from time to time of its bonds, debentures, notes and/or other evidences of indebtedness (herein called the "Securities"), which may be senior secured, senior unsecured, senior subordinated or subordinated, to be issued in one or more series as in this Indenture provided. The Guarantor has duly authorized the execution and delivery of this Indenture to provide for the issuance from time to time of its unconditional guarantee of the Securities (herein called the "Guarantee"), which may be senior secured, senior unsecured, senior subordinated or subordinated, as in this Indenture provided. For and in consideration of the premises and the purchase of the Securities by the Holders thereof, it is mutually covenanted and agreed, for the equal and ratable benefit of the Holders of the Securities or of each series thereof as follows: ARTICLE 1. DEFINITIONS AND INCORPORATION BY REFERENCE Section 1.01 Definitions. "Acceleration Notice" has the meaning provided in Section 8.02. "Affiliate" has the meaning provided in Rule 405 promulgated under the Securities Act of 1933, as amended and in effect on the date hereof. "Authorizing Resolution" means a resolution adopted by the Board of Directors or by an Officer or committee of Officers pursuant to Board delegation authorizing a Series of Securities. An Authorizing Resolution shall be so adopted by both the Company and the Guarantor. "Bankruptcy Law" has the meaning provided in Section 8.01. "Board of Directors" means the Board of Directors of the Company or the Guarantor, as the case may be, or any authorized committee of the Board. "Board Resolution" means a copy of a resolution certified by the Secretary or an Assistant Secretary of the Company or the Guarantor, as the case may be, to have been duly adopted by the Board of Directors and to be in full force and effect on the date of such certification and delivered to the Trustee. "Business Day" means a day that is not a Legal Holiday. "Capital Stock" means the classes of capital stock of a Person as they exist on the date of this Indenture or as they may be constituted from time to time and warrants, options and similar rights to acquire such capital stock. "Common Stock" means the Common Stock ($.01 par value) of the Guarantor as the same exists at the date of this Indenture as originally executed or as such stock may be constituted from time to time. "Company" means the party named as such in this Indenture until a successor replaces it and thereafter means the successor or any other obligor on the Securities. "Company" shall also mean the Guarantor in the event the Company fails to perform those duties required by Sections 312 through 317 of the TIA. "Consolidated Net Worth" of any Person means the consolidated stockholders' equity of such Person, as determined in accordance with generally accepted accounting principles. "Conversion Price" means the initial conversion price of Securities of a Series specified in the Authorizing Resolution establishing the terms of such Series Security, as adjusted in accordance with the provisions of Article 10. "Current Market Price" for any relevant date means, (a) except for purposes of Section 10.04, the average of the last reported sale prices of the Common Stock for the 30 consecutive Business Days commencing 45 Business Days before the day in question and (b) for purposes of Section 10.04 only, the last reported sale price of the Common Stock, in either such case as reported on the composite tape, or similar reporting system, for issues listed on the New York Stock Exchange (or if the Common Stock is not then listed on that exchange, for issues listed on such other national securities exchange upon which the Common Stock is listed as may be designated by the Board of Directors for the purposes hereof) or, if there is no such reported sale on the day or days in question, on the basis of the average of the closing bid and asked quotations as so reported, or, if the Common Stock is not listed on any national securities exchange, on the basis of the average of the high bid and low asked quotations on the day or days in question in the over-the-counter market as reported by the National Association of Securities Dealers' Automated Quotations System, or if not so quoted, as reported by National Quotation Bureau, Incorporated, or any similar organization, or if not so reported as determined in good faith by the Board. "Default" means any event which is, or after notice or passage of time or both would be, an Event of Default. "Designated Senior Debt of the Company" means any single issue of indebtedness of the Company constituting Senior Indebtedness of the Company which at the time of determination has an aggregate principal amount outstanding of at least $25,000,000 and is specifically designated in the instrument or instruments creating, governing or evidencing such Senior Indebtedness of the Company as "Designated Senior Debt of Toll Finance 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). 2 "Designated Senior Debt of the Guarantor" means any single issue of indebtedness of the Guarantor constituting Senior Indebtedness of the Guarantor which at the time of determination has an aggregate principal amount outstanding of at least $25,000,000 and is specifically designated in the instrument or instruments creating, governing or evidencing such Senior Indebtedness of the Guarantor as "Designated Senior Debt of Toll Brothers, Inc." (it being understood that the Guarantor's guarantee of the Revolving Credit Agreement shall be considered a single issue of indebtedness of the Guarantor for purposes of this definition). "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Event of Default" has the meaning provided in Section 8.01. "Guarantee" has the meaning provided in Section 7.01. "Guarantor" means the party named as such in this Indenture until a successor replaces it and thereafter means the successor. "Holder" or "Securityholder" means the Person in whose name a Security is registered on the Registrar's books. "Indenture" means this Indenture as amended or supplemented from time to time. "Interest Payment Date," when used with respect to any installment of interest payable on the Securities, has the meaning provided in Section 1 of the Securities. "Legal Holiday" has the meaning provided in Section 13.08. "Non-Recourse Indebtedness" means indebtedness or other obligations secured by a lien on property to the extent that the liability for such indebtedness or other obligations is limited to the security of the property without liability on the part of the Guarantor or any Subsidiary (other than the Subsidiary which holds title to such property) for any deficiency. "Non-Recourse Judgment" means a judgment in respect of indebtedness or other obligations secured by a lien on property to the extent that the liability for (i) such indebtedness or other obligations and (ii) such judgment is limited to such property without liability on the part of the Guarantor or any Subsidiary (other than the Subsidiary which holds title to such property) for any deficiency. "Officer" means the Chairman of the Board, the President, any Vice President, the Chief Accounting Officer, the Controller, the Treasurer or the Secretary of the Company or the Guarantor, as the case may be. "Officers' Certificate" means a certificate signed by the Chairman of the Board, the President or any Vice President, and by the Chief Accounting Officer, the Controller, the Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary of the Company or the Guarantor, as the case may be. See Sections 13.04 and 13.05. 3 "Opinion of Counsel" means a written opinion from legal counsel who is acceptable to the Trustee. The counsel may be counsel to, but not an employee of, the Company or the Guarantor. See Sections 13.04 and 13.05. "Original Issue Discount Security" means any Security which provides that an amount less than its principal amount is due and payable upon acceleration after an Event of Default. "Paying Agent" has the meaning provided in Section 2.05. "Person" means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization or government or other agency or political subdivision thereof. "Principal" of a debt security means the principal of the security plus the premium, if any, on the security. "Record Date" for the interest payable on any Interest Payment Date on the Securities has the meaning provided in Section 1 of the Securities. "Registrar" has the meaning provided in Section 2.05. "Restricted Subsidiary," if applicable, has the meaning provided in the Authorizing Resolution. "Revolving Credit Agreement" means the Amended and Restated Credit Agreement dated as of May 18, 2001 among First Huntingdon Finance Corp., Toll Brothers, Inc., certain lenders and Bank One, NA, as Administrative Agent, together with all other agreements, instruments and documents executed or delivered pursuant thereto or in connection therewith (including, without limitation, any guarantee agreements and security documents), in each case as such ageements, instruments or documents may be amended (including any amendment and restatement thereof), supplemented, extended, renewed, refinanced, replaced, increased, restructured or otherwise modified from time to time (including (i) through execution of a new facility with one or more different lenders or (ii) through increasing the amount of available borrowings thereunder. "SEC" means the Securities and Exchange Commission. "Securities" means the securities as amended or supplemented from time to time that are authenticated and issued under this Indenture. "Senior Indebtedness of the Company," if applicable, has the meaning provided in the Authorizing Resolution. "Senior Indebtedness of the Guarantor," if applicable, has the meaning provided in the Authorizing Resolution. "Series" means a series of Securities or the Securities of a Series. "Special Record Date" has the meaning provided in Section 2.13. 4 "Subsidiary" means any corporation of which at least a majority in interest of the outstanding stock having by the terms thereof voting power under ordinary circumstances to elect a majority of the directors of such corporation, irrespective of whether or not at the time stock of any other class or classes of such corporation shall have or might have voting power by reason of the happening of any contingency, is at the time, directly or indirectly, owned or controlled by the Guarantor. "Term Loan Agreement" means the Term Loan Agreement dated as of July 25, 2000, as amended, between First Huntingdon Finance Corp., Toll Brothers, Inc., certain lenders and Bank One, NA, as Administrative Agent, together with all other agreements, instruments and documents executed or delivered pursuant thereto or in connection therewith (including, without limitation, any guarantee agreements and security documents), in each case as such ageements, instruments or documents may be amended (including any amendment and restatement thereof), supplemented, extended, renewed, refinanced, replaced, increased, restructured or otherwise modified from time to time (including (i) through execution of a new facility with one or more different lenders or (ii) through increasing the amount of available borrowings thereunder. "TIA" means the Trust Indenture Act of 1939 (15 U.S. Code Sections 77aaa-77bbbb) as in effect on the date of this Indenture and as it may be amended from time to time. "Trustee" means the party named as such in this Indenture until a successor replaces it and thereafter means the successor. "Trust Officer" when used with respect to the Trustee means any officer within the Corporate Trust Department (or any successor group) of the Trustee, including any Vice President, Assistant Vice President, Trust Officer or any other officer of the Trustee customarily performing functions similar to those performed by the persons who at the time shall be such officers and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of such officer's knowledge of and familiarity with the particular subject. Section 1.02 Incorporation by Reference of Trust Indenture Act. Whenever this Indenture refers to a provision of the TIA, the provision is incorporated by reference in and made a part of this Indenture. The following TIA terms used in this Indenture have the following meanings: "commission" means the SEC. "indenture securities" means the Securities. "indenture security holder" means a Securityholder or Holder. "indenture to be qualified" means this Indenture. "indenture trustee" or "institutional trustee" means the Trustee. "obligor on the indenture securities" means the Company, the Guarantor or any other obligor on the indenture securities. All other TIA terms used in this Indenture that are defined by the TIA, defined by TIA reference to another statute or defined by SEC rule have the meanings assigned to them. - --------------- * If applicable. 5 Section 1.03 Incorporation by Reference of Provisions of Securities. Whenever this Indenture refers to a provision of the Securities, the provision is incorporated by reference in and made a part of this Indenture. Section 1.04 Rules of Construction. Unless the context otherwise requires: (1) a term has the meaning assigned to it; (2) an accounting term not otherwise defined has the meaning assigned to it in accordance with generally accepted accounting principles at the time of the relevant computation; (3) "or" is not exclusive; (4) words in the singular include the plural, and in the plural include the singular; and (5) provisions apply to successive events and transactions. ARTICLE 2. THE SECURITIES Section 2.01 Forms Generally. The Securities and the Guarantee, respectively, of each series shall be in such forms (including global form) as shall be established by or pursuant to an Authorizing Resolution or in one or more supplemental indentures hereto, in each case with such appropriate provisions as are required or permitted by this Indenture, and may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon as may be required to comply with the rules of any securities exchange or depositary therefor or as may, consistent herewith, be determined appropriate by the Officers executing such Securities, as evidenced by their execution thereof. If the form of any series of Securities is established by action taken pursuant to an Authorizing Resolution, a copy of an appropriate record of such action shall be certified by the Secretary or any Assistant Secretary of the Company and delivered to the Trustee at or prior to the delivery of a written order of the Company signed by two Officers or an Officer and an Assistant Treasurer of the Company for the authentication and delivery of such Securities. The definitive Securities shall be printed, lithographed or engraved on steel engraved borders or may be produced in any other manner, provided that such method is permitted by the rules of any securities exchange on which such Securities may be listed, all as determined by the Officers executing such Securities, as evidenced by their execution of such Securities. The terms and provisions in the Securities shall constitute, and are hereby expressly made, a part of this Indenture. Section 2.02 Form of Trustee's Certificate of Authentication. The Trustee's certificate of authentication shall be in substantially the following form: 6 This is one of the Securities of the series designated herein referred to in the within mentioned Indenture. BANK ONE TRUST COMPANY, NA As Trustee By:_________________________________ Authorized Signatory Section 2.03 Amount Unlimited, Issuable in Series. The aggregate principal amount of Securities that may be issued under this Indenture is unlimited. The Securities may be issued from time to time in one or more Series. Each Series shall be created by an Authorizing Resolution or a supplemental indenture that establishes the terms of the Series, which may include the following: (1) the title of the Series; (2) any limit upon the aggregate principal amount of the Series which may be authenticated and delivered under this Indenture (except for Securities authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of other Securities which, pursuant to Sections 2.08, 2.09, 2.11 or 10.05 and except for any Securities which, pursuant to Section 2.04, are deemed never to have been authenticated and delivered hereunder); (3) the interest rate or method of calculation of the interest rate; (4) the date from which interest will accrue; (5) the Record Dates for interest payable on Securities of the Series; (6) the dates when, places where and manner in which principal and interest are payable; (7) the Registrar and Paying Agent; (8) the terms of any mandatory or optional redemption by the Company; (9) the terms of any redemption at the option of Holders; (10) the denominations in which Securities are issuable; (11) whether Securities will be issued in registered or bearer form and the terms of any such forms of Securities; (12) whether any Securities will be represented by a global Security and the terms of any such global Security; 7 (13) the currencies (including any composite currency) in which principal or interest or both may be paid; (14) if payments of principal or interest may be made in a currency other than that in which Securities are denominated, the manner for determining such payments; (15) provisions for electronic issuance of Securities or issuance of Securities in uncertificated form; (16) any Events of Default or covenants in addition to or in lieu of those set forth in this Indenture; (17) whether and upon what terms Securities may be defeased; (18) the respective forms of the Securities and the Guarantees; (19) whether the Securities of such Series will be convertible into Common Stock of the Guarantor and the terms thereof (including without limitation the Conversion Price, the conversion period and any other provision in addition to or in lieu of those set forth in this Indenture); (20) whether the Securities and Guarantees of such Series shall be subordinated to any obligations of the Company or the Guarantor, and the obligations to which such subordination will apply; (21) whether the Securities of such Series and/or the Guarantees of such Series will be secured and, if applicable, any provisions for securing all or any portion of the indebtedness evidenced by the Securities of such Series and/or the Guarantees of such Series; (22) any terms that may be required by or advisable under applicable law; and (23) any other terms not inconsistent with this Indenture. All Securities of one Series need not be issued at the same time and, unless otherwise provided, a Series may be reopened for issuances of additional Securities of such Series pursuant to an Authorizing Resolution, an Officers' Certificate or in any indenture supplemental hereto. The creation and issuance of a Series and the authentication and delivery thereof are not subject to any conditions precedent. Section 2.04 Execution and Authentication. Two Officers shall sign the Securities for the Company by manual or facsimile signature. The Company's seal shall be reproduced on the Securities. Two Officers of the Guarantor shall sign the notation of the Guarantee by manual or facsimile signature. 8 If an Officer whose signature is on a Security no longer holds that office at the time the Trustee authenticates the Security, the Security shall be valid nevertheless. A Security shall not be valid until the Trustee manually signs the certificate of authentication on the Security. The signature shall be conclusive evidence that the Security has been authenticated under this Indenture. The Trustee shall authenticate Securities for original issue upon a written order of the Company signed by two Officers or by an Officer and an Assistant Treasurer of the Company. Each Security shall be dated the date of its authentication. In authenticating Securities, and accepting the additional responsibilities under this Indenture in relation to such Securities, the Trustee shall be entitled to receive, and (subject to the TIA) shall be fully protected in relying upon, an Opinion of Counsel stating that all conditions precedent to the authentication and delivery of the Securities have been complied with and that the Securities have been duly executed and, when the Securities have been duly authenticated and delivered by the Trustee, will be duly issued and delivered and will constitute valid and legally binding obligations of the Company, enforceable in accordance with their terms, subject to any applicable bankruptcy, insolvency (including, without limitation, all laws relating to fraudulent transfers), reorganization, moratorium or similar laws affecting the enforcement of creditors' rights generally and subject to the effect of general principles of equity, including, without limitation, concepts of materiality, reasonableness, good faith and fair dealing (regardless of whether enforcement is considered in a proceeding in equity or at law). Section 2.05 Registrar and Paying Agent. The Company shall maintain an office or agency where Securities may be presented for registration of transfer, for exchange or, if applicable, for conversion (in the case of conversion, as agent for the Guarantor) ("Registrar") and an office or agency where Securities may be presented for payment ("Paying Agent"). The Registrar shall keep a register of the Securities and of their transfer. The Company may have one or more co-registrars and one or more additional paying agents. The term "Paying Agent" includes any additional paying agent. The Company shall enter into an appropriate agency agreement with any Registrar, Paying Agent or co-registrar not a party to this Indenture. The agreement shall implement the provisions of this Indenture that relate to such agent. The Company shall notify the Trustee of the name and address of any such agent. If the Company fails to maintain a Registrar or Paying Agent, the Trustee shall act as such. The Company initially appoints the Trustee as Registrar and Paying Agent. Section 2.06 Paying Agent To Hold Money in Trust. Each Paying Agent shall hold in trust for the benefit of the Securityholders or the Trustee all money held by the Paying Agent for the payment of principal or interest on the Securities, and shall notify the Trustee of any default by the Company (or any other obligor on the Securities) in making any such payment. While any such default continues, the Trustee shall require a Paying Agent to pay all money held by it to the Trustee. If the Company or a Subsidiary acts as Paying Agent, it shall segregate the money and hold it as a separate trust fund. The Company at any time may require a Paying Agent to pay all money held by it to the Trustee. Upon doing so the Paying Agent shall have no further liability for the money. 9 Section 2.07 Securityholder Lists. The Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of Securityholders. If the Trustee is not the Registrar, the Company shall furnish to the Trustee on or before each Interest Payment Date and at such other times as the Trustee may request in writing a list in such form and as of such date as the Trustee may reasonably require of the names and addresses of Securityholders. Section 2.08 Transfer and Exchange. Where a Security is presented to the Registrar or a co-registrar with a request to register a transfer, the Registrar shall register its transfer as requested if its reasonable requirements are met. Where Securities are presented to the Registrar or a co-registrar with a request to exchange them for an equal principal amount of Securities of other denominations, the Registrar shall make the exchange as requested if the same requirements are met. To permit transfers and exchanges, the Trustee shall authenticate Securities at the Registrar's request. The Registrar need not transfer or exchange any Security selected for redemption, except the unredeemed part thereof if the Security is redeemed in part, or transfer or exchange any Securities for a period of 15 days before a selection of Securities to be redeemed. The Company may charge a reasonable fee for any transfer or exchange (including the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any such transfer or exchange and any other expenses in connection therewith) but not for any exchange pursuant to Section 2.11, 3.06 or 12.05. This Section 2.08 is subject to the provisions of any series of the Securities providing for the subordination or seniority of such series and the related Guarantees of such series in right of payment to other indebtedness of the Company and the Guarantor, respectively. Section 2.09 Replacement Securities. If the Holder of a Security claims that the Security has been lost, destroyed or wrongfully taken, the Company shall issue and the Trustee shall authenticate a replacement Security and the Guarantor shall endorse the Guarantee thereon if the Trustee's reasonable requirements are met. An indemnity bond must be sufficient in the judgment of the Company, the Guarantor and the Trustee to protect the Company, the Guarantor, the Trustee, the Paying Agent, the Registrar or any co-registrar from any loss which any of them may suffer if a Security is replaced. The Company may charge for its expenses in replacing a Security. Every replacement Security is an additional obligation of the Company and the Guarantor. Section 2.10 Outstanding Securities. Securities outstanding at any time are all Securities authenticated by the Trustee except for those presented to it by the Company or its designee for cancellation and those described in this Section as not outstanding. A Security does not cease to be outstanding because the Company, the Guarantor or one of their Affiliates holds the Security. 10 If a Security is replaced pursuant to Section 2.09, it ceases to be outstanding unless the Trustee receives proof satisfactory to it that the replaced Security is held by a bona fide purchaser. If the Paying Agent holds on a redemption date or maturity date money sufficient to pay Securities payable on that date, then on and after that date such Securities cease to be outstanding and interest on them ceases to accrue. If a Security is called for redemption or if it matures in less than six months and if the Company has satisfied its obligation to pay the Security, or if a Security has been converted in accordance with the provisions of Article 10, the Company and the Trustee need not treat the Security as outstanding in determining whether Holders of the required principal amount of Securities have concurred in any direction, waiver or consent. For each series of Original Issue Discount Securities, the principal amount of such Securities that shall be deemed to be outstanding and used to determine whether the necessary Holders have given any request, demand, authorization, direction, notice, consent or waiver shall be the principal amount of such Securities that could be declared to be due and payable upon acceleration upon an Event of Default as of the date of such determination. When requested by the Trustee, the Company will advise the Trustee of such amount, showing its computations in reasonable detail. Subject to the foregoing provisions of this Section, each Security delivered under this Indenture upon registration of transfer of or in exchange for or in lieu of any other Security shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by such other Security. Section 2.11 Temporary Securities. Until definitive Securities are ready for delivery, the Company may prepare and the Trustee shall authenticate temporary Securities and the Guarantor shall endorse the Guarantee thereon. Temporary Securities shall be substantially in the form of definitive Securities but may have variations that the Company considers appropriate for temporary Securities. Without unreasonable delay, the Company shall prepare and the Trustee shall authenticate definitive Securities and the Guarantor shall endorse the Guarantee thereon in exchange for temporary Securities. Section 2.12 Cancellation. The Company at any time may deliver Securities to the Trustee for cancellation. The Registrar and the Paying Agent shall forward to the Trustee any Securities surrendered to them for transfer, exchange, conversion or payment. The Trustee and no one else shall cancel and destroy all Securities surrendered for transfer, exchange, conversion, payment or cancellation in accordance with its customary procedure. Unless the Authorizing Resolution so provides, the Company may not issue new Securities to replace Securities it has paid or delivered to the Trustee for cancellation. Section 2.13 Defaulted Interest. If the Company defaults in a payment of interest on the Securities, it shall pay the defaulted interest in any lawful manner. It may pay the defaulted interest, plus any interest payable on the interest (to the extent lawful) if an Event of Default has occurred and is continuing, to the Persons who are Securityholders on a subsequent special record date (the "Special Record Date"). The Company shall fix the subsequent Special Record Date and payment date. At least 15 days before such Special Record Date, the Company shall give notice to the Trustee and shall mail to each Securityholder a notice that states the subsequent Special Record Date, the payment date, and the amount of defaulted interest to be paid. 11 Section 2.14 Global Securities. Unless the Authorizing Resolution provides otherwise, the Company may issue some or all of the Securities of a Series in temporary or permanent global form. A global Security shall represent that amount of Securities of a Series as specified in the global Security or as endorsed thereon from time to time. At the Company's request, the Registrar shall endorse a global Security to reflect the amount of any increase or decrease in the Securities represented thereby. The Company may issue a global Security only to a depositary designated by the Company. A depositary may transfer a global Security only as a whole to its nominee or to a successor depositary. The Authorizing Resolution may establish, among other things, the manner of paying principal and interest on a global Security and whether and upon what terms a beneficial owner of an interest in a global Security may exchange such interest for definitive Securities. The Company and the Trustee shall not be responsible for any acts or omissions of a depositary, for any depositary records of beneficial ownership interests or for any transactions between the depositary and beneficial owners. ARTICLE 3. REDEMPTION Section 3.01 Notices to Trustee. Securities of a Series that are redeemable prior to maturity shall be redeemable in accordance with their terms and, unless the Authorizing Resolution provides otherwise, in accordance with this Article. If the Company wants to redeem Securities pursuant to Paragraph 5 of the Securities, it shall notify the Trustee in writing of the redemption date and the principal amount of Securities to be redeemed. Any such notice may be canceled at any time prior to notice of such redemption being mailed to Holders. Any such canceled notice shall be void and of no effect. If the Company wants to credit any Securities previously redeemed, retired or acquired against any redemption pursuant to Paragraph 6 of the Securities, it shall notify the Trustee of the amount of the credit and it shall deliver any Securities not previously delivered to the Trustee for cancellation with such notice. The Company shall give each notice provided for in this Section 3.01 at least 10 Business Days before the notice of any such redemption is to be mailed to Holders (unless a shorter notice shall be satisfactory to the Trustee). 12 Section 3.02 Selection of Securities To Be Redeemed. If less than all the Securities of a Series are to be redeemed, the Trustee shall select the Securities to be redeemed, if the Securities of such Series are listed on a national securities exchange, in accordance with the rules of such exchange, or if the Securities of such Series are not so listed, on either a pro rata basis or by lot or by such method as the Trustee shall deem fair and appropriate. The Trustee shall make the selection from Securities outstanding and not previously called for redemption. Securities in denominations of $1,000 may only be redeemed in whole. The Trustee may select for redemption portions (equal to $1,000 or any integral multiple thereof) of the principal of Securities that have denominations larger than $1,000. Provisions of this Indenture that apply to Securities called for redemption also apply to portions of Securities called for redemption. Section 3.03 Notice of Redemption. At least 30 days but not more than 60 days before a redemption date, the Company shall mail a notice of redemption by first-class mail to each Holder of Securities to be redeemed. The notice shall identify the Securities to be redeemed and shall state: (1) the redemption date; (2) the redemption price; (3) the name and address of the Paying Agent; (4) in the event that any Security is to be redeemed in part only, the portion of the principal amount thereof to be redeemed and that on and after the redemption date, upon surrender of such Security, a new Security or Securities in principal amount equal to the unredeemed portion thereof will be issued; (5) that Securities called for redemption must be surrendered to the Paying Agent to collect the redemption price; (6) that interest on Securities called for redemption ceases to accrue on and after the redemption date; (7) that the Securities are being redeemed pursuant to the mandatory redemption or the optional redemption provisions, as applicable; and (8) if applicable, the current Conversion Price and the date on which the right to convert the Securities into Common Stock will expire. At the Company's request, the Trustee shall give the notice of redemption in the Company's name and at the Company's expense. Section 3.04 Effect of Notice of Redemption. Once notice of redemption is mailed, Securities called for redemption become due and payable on the redemption date and at the redemption price. Upon surrender to the Paying Agent, such Securities shall be paid at the redemption price, plus accrued interest to the redemption date. 13 Section 3.05 Deposit of Redemption Price. Prior to the redemption date, the Company or its designee shall deposit with the Paying Agent money sufficient to pay the redemption price of and accrued and unpaid interest on all Securities to be redeemed on that date. Section 3.06 Securities Redeemed in Part. Upon surrender of a Security that is redeemed in part, the Trustee shall authenticate for the Holder a new Security and the Guarantor shall endorse the Guarantee thereon equal in principal amount to the unredeemed portion of the Securities surrendered. ARTICLE 4. COVENANTS Section 4.01 Payment of Securities. The Company shall pay the principal of and interest on Securities of a Series on the dates and in the manner provided in the Securities of the Series. An installment of principal or interest shall be considered paid on the date due if the Trustee or Paying Agent holds on that date immediately available legal tender funds designated for, available and sufficient to pay the installment. The Company shall pay interest on overdue principal at the rate borne by the Series; it shall pay interest on overdue installments of interest at the same rate to the extent lawful. Section 4.02 SEC Reports. Within 15 days after each of the Guarantor and the Company files with the SEC copies of its annual reports and other information, documents and reports (or copies of such portions of any of the foregoing as the SEC may by rules and regulations prescribe) which they are required to file with the SEC pursuant to Section 13 or 15(d) of the Exchange Act, the Guarantor and the Company shall file the same with the Trustee. If the Guarantor shall cease to be subject to the requirements of Section 13 or 15(d) of the Exchange Act, the Guarantor shall file with the Trustee, within 15 days after the last date on which it would have been required to make such a filing with the SEC, financial statements, including any notes thereto, and a "Management's Discussion and Analysis of Financial Condition and Results of Operations," each comparable to that which the Guarantor would have been required to include in such annual reports, information, documents or other reports, if the Guarantor were then subject to the requirements of Section 13 or 15(d) of the Exchange Act. The Company and the Guarantor also shall comply with the other provisions of TIA Section 314(a). Section 4.03 Compliance Certificate. The Company and the Guarantor each shall deliver to the Trustee within 120 days after the end of their respective fiscal year an Officers' Certificate satisfying the requirements of Section 3.14(a)(4) of the TIA and stating whether or not the signers know of any Default or Event of Default. If they do know of such a Default or Event of Default, the certificate shall describe the Default or Event of Default. 14 ARTICLE 5. SUCCESSOR CORPORATION Section 5.01 When the Company and the Guarantor May Merge, etc. Neither the Company nor the Guarantor shall consolidate with or merge into, or transfer all or substantially all of its assets to, any other person unless (i) such other Person is a corporation organized and existing under the laws of the United States or a State thereof or the District of Columbia and expressly assumes by supplemental indenture all the obligations of the Company or the Guarantor under the Indenture and either the Securities or the Guarantee, as the case may be; and (ii) immediately after giving effect to such transaction no Default or Event of Default shall have occurred and be continuing. Thereafter all such obligations of the predecessor corporation shall terminate. ARTICLE 6. SUBORDINATION Section 6.01 Agreement To Subordinate. The provisions of this Article 6 shall apply to the Securities of a Series to the extent specified in the Authorizing Resolution relating to such Series. Each reference in this Article 6 to "a Security" or "the Securities" refers to the Securities of each such Series so designated. The Company, for itself and its successors, and each Holder, by accepting Securities, agrees that the payment of the principal of, interest on or any other amounts due on the Securities are subordinated in right of payment, to the extent and in the manner stated in this Article 6, to the prior payment in full of all Senior Indebtedness of the Company. Each Holder by accepting Securities authorizes and directs the Trustee on behalf of such Holder to take such action as may be necessary or appropriate to effectuate, as between the holders of Senior Indebtedness of the Company and such Holder, the subordination provided in this Article 6 and appoints the Trustee attorney-in-fact for such Holder for such purpose. This Article 6 shall constitute a continuing offer to all Persons who, in reliance upon such provisions, become holders of, or continue to hold, Senior Indebtedness of the Company, and such provisions are made for the benefit of the holders of Senior Indebtedness of the Company and such holders are made obligees hereunder and they and/or each of them may enforce such provisions. Section 6.02 Company Not To Make Payments with Respect to Securities in Certain Circumstances. (a) Upon the maturity of any Senior Indebtedness of the Company by lapse of time, acceleration (unless waived) or otherwise, all principal thereof and interest thereon shall first be paid in full, or such payment duly provided for in cash or in a manner satisfactory to the holders of such Senior Indebtedness of the Company, before any payment is made on account of the principal of or interest on the Securities or to acquire any of the Securities. 15 (b) In the event that notwithstanding the provisions of this Section 6.02 the Company shall make any payment to the Trustee on account of the principal of or interest on the Securities after the happening of a default in payment of the principal of or interest on Senior Indebtedness of the Company, then, unless and until such default shall have been cured or waived or shall have ceased to exist, such payment (subject to the provisions of Sections 6.06 and 6.07) shall be held by the Trustee, in trust for the benefit of, and shall be paid forthwith over and delivered to, the holders of Senior Indebtedness of the Company (pro rata as to each of such holders on the basis of the respective amounts of Senior Indebtedness of the Company held by them) or their representative or the trustee under the indenture or other agreement (if any) pursuant to which Senior Indebtedness of the Company may have been issued, as their respective interests may appear, for application to the payment of all Senior Indebtedness of the Company remaining unpaid to the extent necessary to pay all Senior Indebtedness of the Company in full in accordance with its terms, after giving effect to any concurrent payment or distribution to or for the holders of the Senior Indebtedness of the Company. The Company shall give prompt written notice to the Trustee of any default in the payment of principal of or interest on any Senior Indebtedness of the Company. Section 6.03 Securities Subordinated to Prior Payment of All Senior Indebtedness of the Company on Dissolution, Liquidation or Reorganization of the Company. Upon any distribution of assets of the Company in any dissolution, winding up, liquidation or reorganization of the Company (whether in bankruptcy, insolvency or receivership proceedings or upon an assignment for the benefits of creditors or otherwise): (a) the holders of all Senior Indebtedness of the Company shall first be entitled to receive payment in full of the principal thereof and interest due thereon before the Holders of the Securities are entitled to receive any payment on account of the principal of or interest on the Securities; (b) any payment or distribution of assets of the Company of any kind or character, whether in cash, property or securities, to which the Holders of the Securities or the Trustee on behalf of the Holders of the Securities would be entitled except for the provisions of this Article 6, including any such payment or distribution which may be payable or deliverable by reason of the payment of any other indebtedness of the Company being subordinated to the payment of the Securities, shall be paid by the liquidating trustee or agent or other Person making such payment or distribution directly to the holders of the Senior Indebtedness of the Company or their representative, or to the trustee under any indenture under which Senior Indebtedness of the Company may have been issued (pro rata as to each such holder, representative or trustee on the basis of the respective amounts of unpaid Senior Indebtedness of the Company held or represented by each), to the extent necessary to make payment in full of all Senior Indebtedness of the Company remaining unpaid, after giving effect to any concurrent payment or distribution or provision therefor to the holders of such Senior Indebtedness of the Company, except that Holders of the Securities would be entitled to receive securities that are subordinated to Senior Indebtedness of the Company to at least the same extent as the Securities; and 16 (c) in the event that notwithstanding the foregoing provisions of this Section 6.03, any payment or distribution of assets of the Company of any kind or character whether in cash, property or securities, including any such payment or distribution which may be payable or deliverable by reason of the payment of any other indebtedness of the Company being subordinated to the payment of the Securities, shall be received by the Trustee or the Holders of the Securities on account of principal of or interest on the Securities before all Senior Indebtedness of the Company is paid in full, or effective provision made for its payment, such payment or distribution (subject to the provisions of Sections 6.06 and 6.07) shall be received and held in trust for and shall be paid over to the holders of the Senior Indebtedness of the Company remaining unpaid or unprovided for or their representative, or to the trustee under any indenture under which such Senior Indebtedness of the Company may have been issued (pro rata as provided in subsection (b) above), for application to the payment of such Senior Indebtedness of the Company until all such Senior Indebtedness of the Company shall have been paid in full, after giving effect to any concurrent payment or distribution or provision therefor to the holders of such Senior Indebtedness of the Company, except that Holders of the Securities would be entitled to receive securities that are subordinated to Senior Indebtedness of the Company to at least the same extent as the Securities. The Company shall give prompt written notice to the Trustee of any dissolution, winding up, liquidation or reorganization of the Company. Section 6.04 Securityholders To Be Subrogated to Rights of Holders of Senior Indebtedness of the Company. Subject to the payment in full of all Senior Indebtedness of the Company, the Holders of the Securities shall be subrogated equally and ratably to the rights of the holders of the Senior Indebtedness of the Company to receive payments or distributions of assets of the Company applicable to the Senior Indebtedness of the Company until all amounts owing on the Securities shall be paid in full, and for the purpose of such subrogation no payments or distributions to the holders of the Senior Indebtedness of the Company by or on behalf of the Company or by or on behalf of the Holders of the Securities by virtue of this Article 6 which otherwise would have been made to the Holders of the Securities shall, as among the Company, its creditors other than holders of the Senior Indebtedness of the Company and the Holders of the Securities, be deemed to be payment by the Company to or on account of the Senior Indebtedness of the Company, it being understood that the provisions of this Article 6 are intended solely for the purpose of defining the relative rights of the Holders of the Securities, on the one hand, and the holders of the Senior Indebtedness of the Company, on the other hand. Section 6.05 Obligation of the Company Unconditional. Nothing contained in this Article 6 or elsewhere in this Indenture or in any Security is intended to or shall impair, as between the Company and the Holders of the Securities, the obligation of the Company, which is absolute and unconditional, to pay to the Holders of the Securities the principal of and interest on the Securities as and when the same shall become due and payable in accordance with their terms, or is intended to or shall affect the relative rights of the Holders of the Securities and creditors of the Company other than the holders of the Senior Indebtedness of the Company, nor shall anything herein or therein prevent the Trustee or the Holder of any Security from exercising all remedies otherwise permitted by applicable law upon default under this Indenture, subject to the rights, if any, under this Article 6 of the holders of Senior Indebtedness of the Company in respect of cash, property or securities of the Company received upon the exercise of any such remedy. Upon any distribution of assets of the Company referred to in this Article 6, the Trustee, subject to the provisions of Sections 9.01 and 9.02, and the Holders of the Securities shall be entitled to rely upon any order or decree made by any court of competent jurisdiction in which such dissolution, winding up, liquidation or reorganization proceedings are pending, or a certificate of the liquidating trustee or agent or other Person making any distribution to the Trustee or the Holders of the Securities, for the purpose of ascertaining the Persons entitled to participate in such distribution, the holders of the Senior Indebtedness of the Company and other Indebtedness of the Company, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article 6. 17 Nothing contained in this Article 6 or elsewhere in this Indenture or in any Security is intended to or shall affect the obligation of the Company to make, or prevent the Company from making, at any time except during the pendency of any dissolution, winding up, liquidation or reorganization proceeding, and except during the continuance of any default specified in Section 6.02 (not cured or waived), payments at any time of the principal of or interest on the Securities. Section 6.06 Knowledge of Trustee. Notwithstanding any provision of this Indenture, the Trustee shall not be charged with knowledge of the existence of any facts which would prohibit the making of any payment of monies to or by the Trustee until two Business Days after the Trustee shall have received written notice thereof from the Company, any Securityholder or any Paying Agent or the holder or representative of any class of Senior Indebtedness of the Company. Section 6.07 Application by Trustee of Monies Deposited With It. If at least two Business Days prior to the date on which by the terms of this Indenture any monies deposited with the Trustee or any Paying Agent may become payable for any purpose (including, without limitation, the payment of either the principal of or the interest on any Security) the Trustee shall not have received with respect to such monies the notice provided for in Section 6.06, then the Trustee shall have full power and authority to receive such monies and to apply the same to the purpose for which they were received and shall not be affected by any notice to the contrary which may be received by it on or after such date. This Section shall be construed solely for the benefit of the Trustee and such Paying Agent and shall not otherwise affect the rights of holders of Senior Indebtedness of the Company. Section 6.08 Subordination Rights Not Impaired by Acts or Omissions of Company or Holders of Senior Indebtedness of the Company. No right of any present or future holders of any Senior Indebtedness of the Company to enforce subordination as provided herein shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of the Company or by any act or failure to act, in good faith, by any such holder, or by any noncompliance by the Company with the terms of this Indenture, regardless of any knowledge thereof which any such holder may have or be otherwise charged with. The holders of Senior Indebtedness of the Company may extend, renew, modify or amend the terms of the Senior Indebtedness of the Company or any security therefor and release, sell or exchange such security and otherwise deal freely with the Company, all without affecting the liabilities and obligations of the parties to this Indenture or the Holders. No provision in any supplemental indenture which affects the superior position of the holders of Senior Indebtedness of the Company shall be effective against the holders of Senior Indebtedness of the Company who have not consented thereto. 18 Section 6.09 Securityholders Authorize Trustee To Effectuate Subordination of Securities. Each Holder of Securities by acceptance thereof authorizes and expressly directs the Trustee on its, his or her behalf to take such action as may be necessary or appropriate to effectuate the subordination provided in this Article 6 and appoints the Trustee its, his or her attorney-in-fact for such purpose, including, in the event of any dissolution, winding up, liquidation or reorganization of the Company (whether in bankruptcy, insolvency or receivership proceedings or upon an assignment for the benefit of creditors or otherwise) tending towards liquidation of the business and assets of the Company, the immediate filing of a claim for the unpaid balance of its, his or her Securities in the form required in said proceedings and cause said claim to be approved. If the Trustee does not file a proper claim or proof of debt in the form required in such proceedings prior to 30 days before the expiration of the time to file such claim or claims, then the holders of Senior Indebtedness of the Company have the right to file and are hereby authorized to file an appropriate claim for and on behalf of the Holders of said Securities. Section 6.10 Right of Trustee To Hold Senior Indebtedness of the Company. The Trustee shall be entitled to all of the rights set forth in this Article 6 in respect of any Senior Indebtedness of the Company at any time held by it to the same extent as any other holder of Senior Indebtedness of the Company and nothing in this Indenture shall be construed to deprive the Trustee of any of its rights as such holder. Section 6.11 Article Six Not To Prevent Events of Default. The failure to make a payment on account of principal or interest by reason of any provision in this Article 6 shall not be construed as preventing the occurrence of an Event of Default under Section 8.01. ARTICLE 7. GUARANTEE Section 7.01 Guarantee. The Guarantor hereby unconditionally guarantees (such guarantee to be referred to herein as the "Guarantee") to each Holder of a Security authenticated and delivered by the Trustee and to the Trustee and its successors and assigns, irrespective of the validity and enforceability of this Indenture, the Securities or the obligations of the Company hereunder or thereunder, (i) the due and punctual payment of the principal of and any interest on the Securities, whether at maturity or on an Interest Payment Date, by acceleration or otherwise, and interest on the overdue principal of and interest, if any, on the Securities, if lawful, and all other obligations of the Company to the Holders or the Trustee hereunder or under the Securities shall be promptly paid in full, all in accordance with the terms hereof and thereof including all amounts payable to the Trustee under Section 9.07 hereof, and (ii) in case of any extension of time of payment or renewal of any Securities or any of such other obligations, that the same shall be promptly paid in full when due or to be performed in accordance with the terms of the extension or renewal, whether at stated maturity, by acceleration or otherwise. 19 If the Company fails to make any payment when due of any amount so guaranteed for whatever reason, the Guarantor shall be obligated to pay the same immediately. The Guarantor hereby agrees that its obligations hereunder shall be continuing, absolute and unconditional, irrespective of, and shall be unaffected by, the validity, regularity or enforceability of the Securities, this Indenture, the absence of any action to enforce the same, any waiver or consent by any Holder of the Securities or the Trustee with respect to any provisions hereof or thereof, the recovery of any judgment against the Company, any action to enforce the same or any other circumstance which might otherwise constitute a legal or equitable discharge or defense of the Guarantor. The Guarantor hereby waives diligence, presentment, demand of payment, demand of performance, filing of claims with a court in the event of insolvency or bankruptcy of the Company, any right to require a proceeding first against the Company, the benefit of discussion, protest, notice and all demand whatsoever and covenants that this Guarantee shall not be discharged except by complete performance of the obligations contained in the Securities, in this Indenture and in this Article 7. If any Securityholder or the Trustee is required by any court or otherwise to return to the Company or the Guarantor, or any custodian, trustee, liquidator or other similar official acting in relation to the Company or the Guarantor, any amount paid by the Company or the Guarantor to the Trustee or such Securityholder, this Article 7, to the extent theretofore discharged, shall be reinstated in full force and effect. The Guarantor agrees that it shall not be entitled to any right of subrogation in relation to the Securityholders in respect of any obligations guaranteed hereby until payment in full of all obligations guaranteed hereby. The Guarantor further agrees that, as between the Guarantor, on the one hand, and the Holders and the Trustee, on the other hand, (i) the maturity of the obligations guaranteed hereby may be accelerated as provided in Article 8 for the purposes of the Guarantee, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the obligations guaranteed hereby, and (ii) in the event of any declaration of acceleration of such obligations as provided in Article 8 such obligations (whether or not due and payable) shall forthwith become due and payable by the Guarantor for the purpose of this Article 7. In addition, without limiting the foregoing, upon the effectiveness of an acceleration under Article 8, the Trustee may make a demand for payment on the Securities under the Guarantee provided hereunder and not discharged. The Guarantor shall be subrogated to all rights of the Holder of any Securities against the Company in respect of any amounts paid to the Holder by the Guarantor pursuant to the provisions of this Guarantee; provided that the Guarantor shall not be entitled to enforce, or to receive any payments arising out of or based upon, such right of subrogation until the principal of and interest on all the Securities shall have been paid in full. The Guarantee set forth in this Section 7.01 shall not be valid or become obligatory for any purpose with respect to a Security until the certificate of authentication on such Security shall have been signed by the Trustee or any duly appointed agent. Section 7.02 Agreement To Subordinate. The provisions of this Article 7 shall apply to the Securities of a Series to the extent specified in the Authorizing Resolution relating to such Series. Each reference in this Article 7 to "a Security" or "the Securities" refers to the Securities of each such Series so designated. 20 The Guarantor, for itself and its successors, and each Holder, by accepting the Securities, agrees that the payment of the principal of, interest on and any other amounts due on the Securities pursuant to the Guarantee are subordinated in right of payment, to the extent and in the manner stated in this Article 7, to the prior payment in full of all Senior Indebtedness of the Guarantor. Each Holder by accepting Securities authorizes and directs the Trustee on behalf of such Holder to take such action as may be necessary or appropriate to effectuate, as between the holders of Senior Indebtedness of the Guarantor and such Holder, the subordination provided in this Article 7 and appoints the Trustee attorney-in-fact for such Holder for such purpose. This Article shall constitute a continuing offer to all Persons who, in reliance upon such provisions, become holders of, or continue to hold, Senior Indebtedness of the Guarantor, and such provisions are made for the benefit of the holders of Senior Indebtedness of the Guarantor, and such holders are made obligees hereunder and they and/or each of them may enforce such provisions. Section 7.03 Guarantor Not To Make Payments with Respect to Securities in Certain Circumstances. (a) Upon the maturity of any Senior Indebtedness of the Guarantor by lapse of time, acceleration (unless waived) or otherwise, all principal thereof and interest thereon shall first be paid in full, or such payment duly provided for in cash or in a manner satisfactory to the holders of such Senior Indebtedness of the Guarantor, before any payment, pursuant to the Guarantee, is made on account of the principal of or interest on the Securities or to acquire any of the Securities. (b) In the event that notwithstanding the provisions of this Section 7.03 the Guarantor shall make any payment to the Trustee on account of the principal of or interest on the Securities after the happening of a default in payment of the principal of or interest on Senior Indebtedness of the Guarantor, then, unless and until such default shall have been cured or waived or shall have ceased to exist, such payment (subject to the provisions of Sections 7.07 and 7.08) shall be held by the Trustee, in trust for the benefit of, and shall be paid forthwith over and delivered to, the holders of Senior Indebtedness of the Guarantor (pro rata as to each of such holders on the basis of the respective amounts of Senior Indebtedness of the Guarantor held by them) or their representative or the trustee under the indenture or other agreement (if any) pursuant to which Senior Indebtedness of the Guarantor may have been issued, as their respective interests may appear, for application to the payment of all Senior Indebtedness of the Guarantor remaining unpaid to the extent necessary to pay all Senior Indebtedness of the Guarantor in full in accordance with its terms, after giving effect to any concurrent payment or distribution to or for the holders of Senior Indebtedness of the Guarantor. The Guarantor shall give prompt written notice to the Trustee of any default in the payment of principal of or interest on any Senior Indebtedness of the Guarantor. 21 Section 7.04 Guarantee Subordinated to Prior Payment of All Senior Indebtedness of the Guarantor on Dissolution, Liquidation or Reorganization of the Guarantor. Upon any distribution of assets of the Guarantor in any dissolution, winding up, liquidation or reorganization of the Guarantor (whether in bankruptcy, insolvency or receivership proceedings or upon an assignment for the benefit of creditors or otherwise): (a) the holders of all Senior Indebtedness of the Guarantor shall first be entitled to receive payment in full of the principal thereof and interest due thereon before the Holders of the Securities are entitled to receive any payment on account of the principal of or interest on the Securities pursuant to the Guarantee; (b) any payment or distribution of assets of the Guarantor of any kind or character, whether in cash, property or securities, to which the Holders of the Securities or the Trustee on behalf of the Holders of the Securities would be entitled except for the provisions of this Article 7, including any such payment or distribution which may be payable or deliverable by reason of the payment of any other indebtedness of the Guarantor being subordinated to the payment of the Securities, shall be paid by the liquidating trustee or agent or other Person making such payment or distribution directly to the holders of the Senior Indebtedness of the Guarantor or their representative, or to the trustee under any indenture under which Senior Indebtedness of the Guarantor may have been issued (pro rata as to each such holder, representative or trustee on the basis of the respective amounts of unpaid Senior Indebtedness of the Guarantor held or represented by each), to the extent necessary to make payment in full of all Senior Indebtedness of the Guarantor remaining unpaid, after giving effect to any concurrent payment or distribution or provision therefor to the holders of such Senior Indebtedness of the Guarantor, except that Holders of the Securities would be entitled to receive securities that are subordinated to Senior Indebtedness of the Guarantor to at least the same extent as the Securities; and (c) in the event that, notwithstanding the foregoing provisions of this Section 7.04, any payment or distribution of assets of the Guarantor of any kind or character, whether in cash, property or securities, including any such payment or distribution which may be payable or deliverable by reason of the payment of any other indebtedness of the Guarantor being subordinated to the payment of the Securities, shall be received by the Trustee or the Holders of the Securities on account of principal of or interest on the Securities before all Senior Indebtedness of the Guarantor is paid in full, or effective provision made for its payment, such payment or distribution (subject to the provisions of Sections 7.07 and 7.08) shall be received and held in trust for and shall be paid over to the holders of the Senior Indebtedness of the Guarantor remaining unpaid or unprovided for or their representative, or to the trustee under any indenture under which such Senior Indebtedness of the Guarantor may have been issued (pro rata as provided in subsection (b) above), for application to the payment of such Senior Indebtedness of the Guarantor until all such Senior Indebtedness of the Guarantor shall have been paid in full, after giving effect to any concurrent payment or distribution or provision therefor to the holders of such Senior Indebtedness of the Guarantor, except that Holders of the Securities would be entitled to receive securities that are subordinated to Senior Indebtedness of the Guarantor to at least the same extent as the Securities. 22 Upon any distribution of assets of the Guarantor referred to in this Article 7, the Trustee, subject to the provisions of Sections 9.01 and 9.02, and the Holders of the Securities shall be entitled to rely upon any order or decree made by any court of competent jurisdiction in which such dissolution, winding up, liquidation or reorganization proceedings are pending, or a certificate of the liquidating trustee or agent or other Person making any distribution to the Trustee or the Holders of the Securities, for the purpose of ascertaining the Persons entitled to participate in such distribution, the holders of the Senior Indebtedness of the Guarantor and other Indebtedness of the Guarantor, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article 7. The Guarantor shall give prompt written notice to the Trustee of any dissolution, winding up, liquidation or reorganization of the Guarantor. Section 7.05 Securityholders To Be Subrogated to Rights of Holders of Senior Indebtedness of the Guarantor. Subject to the payment in full of all Senior Indebtedness of the Guarantor, the Holders of the Securities shall be subrogated equally and ratably to the rights of the holders of the Senior Indebtedness of the Guarantor to receive payments or distributions of assets of the Guarantor applicable to the Senior Indebtedness of the Guarantor until all amounts owing on the Securities shall be paid in full, and for the purpose of such subrogation no payments or distributions to the holders of the Senior Indebtedness of the Guarantor by or on behalf of the Guarantor or by or on behalf of the Holders of the Securities by virtue of this Article 7 which otherwise would have been made to the Holders of the Securities shall, as among the Guarantor, its creditors other than holders of Senior Indebtedness of the Guarantor and the Holders of the Securities, be deemed to be payment by the Guarantor to or on account of the Senior Indebtedness of the Guarantor, it being understood that the provisions of this Article 7 are intended solely for the purpose of defining the relative rights of the Holders of the Securities, on the one hand, and the holders of the Senior Indebtedness of the Guarantor, on the other hand. Section 7.06 Obligation of the Guarantor Unconditional. Nothing contained in this Article 7 or elsewhere in this Indenture or in any Security is intended to or shall impair, as between the Guarantor and the Holders of the Securities, the obligation of the Guarantor, which is absolute and unconditional, to pay to the Holders of the Securities the principal of and interest on the Securities as and when the same shall become due and payable in accordance with the terms of the Guarantee, or is intended to or shall affect the relative rights of the Holders of the Securities and creditors of the Guarantor other than the holders of the Senior Indebtedness of the Guarantor, nor shall anything herein or therein prevent the Trustee or the Holder of any Security from exercising all remedies otherwise permitted by applicable law upon Default under this Indenture, subject to the rights, if any, under this Article 7 of the holders of Senior Indebtedness of the Guarantor in respect of cash, property or securities of the Guarantor received upon the exercise of any such remedy. Nothing contained in this Article 7 or elsewhere in this Indenture or in any Security is intended to or shall affect the obligation of the Guarantor to make, or prevent the Guarantor from making, at any time except during the pendency of any dissolution, winding up, liquidation or reorganization proceeding, and except during the continuance of any default specified in Section 7.03 (not cured or waived), payments at any time of the principal of or interest on the Securities pursuant to the Guarantee. 23 Section 7.07 Knowledge of Trustee. Notwithstanding any provision of this Indenture, the Trustee shall not be charged with knowledge of the existence of any facts which would prohibit the making of any payment of monies to or by the Trustee until two Business Days after the Trustee shall have received written notice thereof from the Guarantor, any Securityholder or any Paying Agent or the holder or representative of any class of Senior Indebtedness of the Guarantor. Section 7.08 Application by Trustee of Monies Deposited With It. If at least two Business Days prior to the date on which by the terms of this Indenture any monies deposited with the Trustee or any Paying Agent may become payable for any purpose (including, without limitation, the payment of either the principal of or the interest on any Security) the Trustee shall not have received with respect to such monies the notice provided for in Section 7.07, then the Trustee shall have full power and authority to receive such monies and to apply the same to the purpose for which they were received and shall not be affected by any notice to the contrary which may be received by it on or after such date. This Section shall be construed solely for the benefit of the Trustee and such Paying Agent and shall not otherwise affect the rights of holders of Senior Indebtedness of the Guarantor. Section 7.09 Subordination Rights Not Impaired by Acts or Omissions of Guarantor or Holders of Senior Indebtedness of the Guarantor. No right of any present or future holders of any Senior Indebtedness of the Guarantor to enforce subordination as provided herein shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of the Guarantor or by any act or failure to act, in good faith, by any such holder, or by any noncompliance by the Guarantor with the terms of this Indenture, regardless of any knowledge thereof which any such holder may have or be otherwise charged with. The holders of Senior Indebtedness of the Guarantor may extend, renew, modify or amend the terms of the Senior Indebtedness of the Guarantor, or any security therefor and release, sell or exchange such security and otherwise deal freely with the Guarantor, all without affecting the liabilities and obligations of the parties to the Indenture or the Holders. No provision in any supplemental indenture which affects the superior position of the holders of Senior Indebtedness of the Guarantor shall be effective against the holders of Senior Indebtedness of the Guarantor who have not consented thereto. Section 7.10 Securityholders Authorize Trustee To Effectuate Subordination of Guarantee. Each Holder of Securities by acceptance thereof authorizes and expressly directs the Trustee on its, his or her behalf to take such action as may be necessary or appropriate to effectuate the subordination provided in this Article 7 and appoints the Trustee its, his or her attorney-in-fact for such purpose, including, in the event of any dissolution, winding up, liquidation or reorganization of the Guarantor (whether in bankruptcy, insolvency or receivership proceedings or upon an assignment for the benefit of creditors or otherwise) tending towards liquidation of the business and assets of the Guarantor, the immediate filing of a claim for the unpaid balance, pursuant to the Guarantee, of its, his or her Securities, in the form required in said proceedings and cause said claim to be approved. If the Trustee does not file a proper claim or proof of debt in the form required in such proceeding prior to 30 days before the expiration of the time to file such claim or claims, then the holders of Senior Indebtedness of the Guarantor have the right to file and are hereby authorized to file an appropriate claim for and on behalf of the Holders of said Securities. 24 Section 7.11 Right of Trustee To Hold Senior Indebtedness of the Guarantor. The Trustee shall be entitled to all of the rights set forth in this Article 7 in respect of any Senior Indebtedness of the Guarantor at any time held by it to the same extent as any other holder of Senior Indebtedness of the Guarantor, and nothing in this Indenture shall be construed to deprive the Trustee of any of its rights as such holder. Section 7.12 Article 7 Not To Prevent Events of Default. The failure to make a payment on account of principal or interest by reason of any provision in this Article 7 shall not be construed as preventing the occurrence of an Event of Default under Section 8.01. Section 7.13 Execution and Delivery of Guarantee. To evidence the Guarantee set forth in this Article 7, the Guarantor hereby agrees that a notation of the Guarantee, substantially in the form established by or pursuant to an Authorizing Resolution or in one or more supplemental indentures in accordance with Section 2.01, shall be endorsed on each Security authenticated and delivered by the Trustee and that this Indenture shall be executed on behalf of the Guarantor by the Chairman of the Board, its President or one of its Vice Presidents under a facsimile of its seal reproduced thereon. The Guarantor hereby agrees that its Guarantee shall remain in full force and effect notwithstanding any failure to endorse on each Security a notation of the Guarantee. If an Officer whose signature is on this Indenture or on the Securities no longer holds that office at the time the Trustee authenticates the Security on which a notation of the Guarantee is endorsed, the Guarantee shall be valid nevertheless. The delivery of any Security by the Trustee, after the authentication thereof hereunder, shall constitute due delivery of the Guarantee set forth in this Indenture on behalf of the Guarantor. Section 7.14 Subordination of Indebtedness Owed by the Company to the Guarantor. Any indebtedness owed by the Company to the Guarantor shall be subordinate to all obligations of the Company with respect to the Securities and this Indenture to the same extent as the Securities are subordinated to Senior Indebtedness of the Company. Section 7.15 Officers' Certificate. If there occurs an event referred to in the first sentence of Section 7.04(c) or the first sentence of Section 7.04, the Guarantor shall promptly give to the Trustee an Officers' Certificate (on which the Trustee may conclusively rely) identifying all holders of Senior Indebtedness of the Guarantor and the principal amount of Senior Indebtedness of the Guarantor then outstanding held by each such holder and stating the reasons why such Officers' Certificate is being delivered to the Trustee. 25 ARTICLE 8. DEFAULTS AND REMEDIES Section 8.01 Events of Default. An "Event of Default" on a Series occurs if: (1) the Company or the Guarantor defaults in the payment of interest on any Security of the Series when the same becomes due and payable and the default continues for a period of 30 days whether or not such payment shall be prohibited by the provisions of Article 6 or Article 7; or (2) the Company or the Guarantor defaults in the payment of the principal of any Security of the Series when the same becomes due and payable at maturity or upon redemption, whether or not such payment shall be prohibited by the provisions of Article 6 or Article 7; or (3) the Company or the Guarantor fails to comply with any of its other agreements in the Securities, the Guarantee or this Indenture applicable to the Series and such failure continues for the period and after the notice specified below; or (4) there occurs a default in the payment of indebtedness of the Company, the Guarantor or any Subsidiary under the terms of the instrument evidencing or securing such indebtedness permitting the holder thereof to accelerate the payment of in excess of an aggregate of $10,000,000 in principal amount of such indebtedness (after the lapse of applicable grace periods) or, in the case of defaults other than payment defaults, there occurs an acceleration of any such indebtedness if such acceleration is not rescinded or annulled within 10 days after such acceleration; provided, the term "indebtedness" as used in this Section 8.01(4) shall not include an acceleration of or default on Non-Recourse Indebtedness (a) if the Guarantor would be able to declare a dividend pursuant to the terms of such Series in the amount of the excess of the aggregate book value of all property (net of any previous write-downs or reserves in respect of such property) subject to the Non-Recourse Indebtedness being accelerated or in default over such Non-Recourse Indebtedness or (b) which consists of a purchase money obligation, provided such purchase money obligation does not exceed $10,000,000 in aggregate principal amount, whether or not the Guarantor is so diligently contesting); or (5) a final judgment for the payment of money in an amount in excess of $10,000,000 shall be entered against the Company, the Guarantor or any Subsidiary, and shall remain undischarged for a period (during which execution shall not be effectively stayed) of 60 days after the date on which the right to appeal has expired; provided the term "final judgment" shall not include a Non-Recourse Judgment unless the book value of all property (net of any previous write-downs or reserves in respect of such property) subject to such Non-Recourse Judgment exceeds the amount of such Non-Recourse Judgment by more than $10,000,000; or (6) there occurs as "Event of Default," as that term is defined in the indenture relating to the 8-3/4% Senior Subordinated Notes due 2006 issued by Toll Corp., a Delaware corporation ("Toll Corp."), the 7-3/4% Senior Subordinated Notes due 2007 issued by Toll Corp., the 8-1/8% Senior Subordinated Notes due 2009 issued by Toll Corp., the 8% Senior Subordinated Notes due 2009 issued by Toll Corp. or the 8-1/4% Senior Subordinated Notes due 2011 issued by Toll Corp. (each such series being hereinafter referred to as a "Previously Issued Series"); provided that on the date of the occurrence, the outstanding principal amount of at least one Previously Issued Series to which the occurrence relates exceeds $5,000,000, or (7) the Company and the Guarantor pursuant to or within the meaning of any Bankruptcy Law: 26 (A) commences a voluntary case, (B) consents to the entry of an order for relief against it in an involuntary case, (C) consents to the appointment of a Custodian of it or for all or substantially all of its property, or (D) makes a general assignment for the benefit of its creditors; or (8) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that: (A) provides for relief against the Company and the Guarantor in an involuntary case, (B) appoints a Custodian of the Company and the Guarantor for all or substantially all of its property, or (C) orders the liquidation of the Company and the Guarantor and the order or decree remains unstayed and in effect for 90 days; or (9) the Guarantee shall for any reason (other than pursuant to its terms) cease to be in full force and effect. The term "Bankruptcy Law" means Title 11, U.S. Code or any similar Federal or State law for the relief of debtors. The term "Custodian" means any receiver, trustee, assignee, liquidator or similar official under any Bankruptcy Law. A default under clause (3) is not an Event of Default until the Trustee or the Holders of at least 25% in principal amount of the Securities of the Series affected notify the Company of the default and the Company does not cure the default within 60 days after receipt of the notice. The notice must specify the default, demand that it be remedied and state that the notice is a "Notice of Default." Section 8.02 Acceleration. If an Event of Default (other than an Event of Default under Section 8.01(7) or 8.01(8)) on a Series occurs and is continuing, the Trustee by notice to the Company and the Person or Persons designated to receive notices for the Administrative Agent (or other Person acting on behalf of the banks) under the Revolving Credit Agreement and/or the Term Loan Agreement, or the Holders of at least 25% in principal amount of the outstanding Securities of the Series by notice to the Company, the Trustee and such Person or Persons (either such notice is referred to herein as an "Acceleration Notice") may declare the unpaid principal of and accrued and unpaid interest on all the Securities of the Series to be due and payable if, with respect to such Series, (i)(a) no Designated Senior Debt of the Company or the Guarantor is outstanding, or (b) if the Securities of the Series are not 27 subordinated to other indebtedness of the Company, immediately, or (ii) if Designated Senior Debt of the Company or the Guarantor is outstanding and the Securities of the Series are subordinated to other indebtedness of the Company, upon the earlier of (A) ten days after such Acceleration Notice is received by the Company and (B) the acceleration of any Senior Indebtedness of the Company or the Guarantor. If an Event of Default specified in Section 8.01(7) or 8.01(8) occurs, the unpaid principal of and accrued and unpaid interest on the Securities then outstanding shall ipso facto become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Securityholder. The Holders of a majority in principal amount of the Securities of the Series by notice to the Trustee may rescind such declaration or acceleration and its consequences if all existing Events of Default have been cured or waived (except nonpayment of principal or interest that has become due solely because of the acceleration) and if the rescission would not conflict with any judgment or decree. The Company and the Guarantor (i) agree, promptly after execution of this Indenture, to notify the Trustee in writing of the Person or Persons referred to in the first sentence of this Section 8.02 and (ii) agree, promptly after any change thereof, to so notify the Trustee. Any failure by the Trustee or holders of Securities to give an Acceleration Notice to such Person or Persons will not affect the substance or validity of the Acceleration Notice provided that it is otherwise given in accordance with the first paragraph of this Section 8.02. Section 8.03 Other Remedies. If an Event of Default on a Series occurs and is continuing, the Trustee may pursue any available remedy by proceeding at law or in equity to collect the payment of principal or interest on the Series or to enforce the performance of any provisions of the Securities or this Indenture and applicable to the Series. The Trustee may maintain a proceeding even if it does not possess any of the Securities or does not produce any of them in the proceeding. A delay or omission by the Trustee or any Securityholder in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default. No remedy is exclusive of any other remedy. All available remedies are cumulative to the extent permitted by law. Section 8.04 Waiver of Past Defaults. Subject to Section 12.02, the Holders of a majority in principal amount of the Securities of a Series by notice to the Trustee may waive on behalf of all Holders of Securities of the Series an existing Default and its consequences. When a Default is waived, it is cured and stops continuing, but no such waiver shall extend to any subsequent or other Default or impair any right consequent thereon. Section 8.05 Control by Majority. The Holders of a majority in principal amount of the Securities of a Series may direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on it with respect to such Series. However, the Trustee may refuse to follow any direction that conflicts with law or this Indenture, that is unduly prejudicial to the rights of another Securityholder, or that would involve the Trustee in personal liability. Section 8.06 Limitation on Suits. A Securityholder may not pursue any remedy with respect to this Indenture or the Series unless: 28 (1) the Holder gives to the Trustee written notice of a continuing Event of Default; (2) the Holders of at least 25% in principal amount of the Securities of the Series make a written request to the Trustee to pursue the remedy; (3) such Holder or Holders offer to the Trustee indemnity satisfactory to the Trustee against any loss, liability or expense; (4) the Trustee does not comply with the request within 60 days after receipt of the request and the offer of indemnity; and (5) during such 60-day period the Holders of a majority in principal amount of the Securities do not give the Trustee a direction inconsistent with such request. A Securityholder may not use this Indenture to prejudice the rights of another Securityholder or to obtain a preference or priority over another Securityholder. Section 8.07 Rights of Holders To Receive Payment. Notwithstanding any other provisions of this Indenture, the right of any Holder of a Security to receive payment of principal of and interest on the Security, on or after the respective due dates expressed in the Security, or to bring suit for the enforcement of any such payment on or after such respective dates, shall not be impaired or affected without the consent of the Holder. Section 8.08 Collection Suit by Trustee. If an Event of Default in payment of interest or principal specified in Section 8.01(1) or (2) occurs and is continuing, the Trustee may recover judgment in its own name and as trustee of an express trust against the Company, the Guarantor or any other obligor on the Securities for the whole amount of principal and interest remaining unpaid. Section 8.09 Trustee May File Proofs of Claim. The Trustee may file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee and the Securityholders allowed in any judicial proceedings relative to the Company (or any other obligor upon the Securities, including the Guarantor), its creditors or its property. Section 8.10 Priorities. If the Trustee collects any money pursuant to this Article 8, it shall pay out the money in the following order: First: to the Trustee for amounts due under Section 9.07; Second: to the holders of Senior Indebtedness of the Company as required by Article 6 and to the holders of Senior Indebtedness of the Guarantor as required by Article 7; Third: to Securityholders of the Series for amounts due and unpaid on the Securities for principal and interest, ratably, without preference or priority of any kind, according to the amounts due and payable on the Series for principal and interest, respectively; and 29 Fourth: to the Company, or its designee. The Trustee may fix a record date and payment date for any payment to Securityholders. Section 8.11 Undertaking for Costs. In any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as Trustee, a court in its discretion may require the filing by any party litigant in the suit of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including attorneys' fees, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party litigant. This Section does not apply to a suit by the Trustee, a suit by a Holder pursuant to Section 8.07, or a suit by Holders of more than 10% in principal amount of the Securities of the Series. ARTICLE 9. TRUSTEE Section 9.01 Duties of Trustee. (a) If an Event of Default has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by this Indenture and use the same degree of care and skill in its exercise as a prudent man would exercise or use under the circumstances in the conduct of his own affairs. (b) Except during the continuance of an Event of Default: (1) The Trustee need perform only those duties that are specifically set forth in this Indenture and no others. (2) In the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture. However, the Trustee shall examine the certificates and opinions to determine whether or not they conform to the requirements of this Indenture. (c) The Trustee may not be relieved from liability for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that: (1) This paragraph does not limit the effect of paragraph (b) of this Section. (2) The Trustee shall not be liable for any error of judgment made in good faith by a Trust Officer, unless it is proved that the Trustee was negligent in ascertaining the pertinent facts. (3) The Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 8.05. 30 (d) Every provision of this Indenture that in any way relates to the Trustee is subject to paragraphs (a), (b) and (c) of this Section. (e) The Trustee may refuse to perform any duty or exercise any right or power unless it receives indemnity satisfactory to it against any loss, liability or expense. (f) The Trustee shall not be liable for interest on any money received by it except as the Trustee may agree with the Company or the Guarantor, as the case may be. (g) Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law. Section 9.02 Rights of Trustee. Subject to Section 9.01: (a) The Trustee may rely on any document believed by it to be genuine and to have been signed or presented by the proper person. The Trustee need not investigate any fact or matter stated in the document. (b) Before the Trustee acts or refrains from acting, it may require an Officers' Certificate or an Opinion of Counsel. The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on the Certificate or Opinion. (c) The Trustee may act through agents and shall not be responsible for the misconduct or negligence of any agent appointed with due care. (d) The Trustee shall not be liable for any action it takes or omits to take in good faith which it believes to be authorized or within its rights or powers. Section 9.03 Individual Rights of Trustee. The Trustee in its individual or any other capacity may become the owner or pledgee of Securities and may otherwise deal with the Company or its affiliates with the same rights it would have if it were not Trustee. Any Paying Agent, Registrar or co-registrar may do the same with like rights. However, the Trustee must comply with Sections 9.10 and 9.11. Section 9.04 Trustee Disclaimer. The Trustee makes no representation as to the validity or adequacy of this Indenture or the Securities, it shall not be accountable for the Company's use of the proceeds from the Securities, and it shall not be responsible for any statement in the Securities other than its certificate of authentication. Section 9.05 Notice of Defaults. If a Default on a Series occurs and is continuing and if it is known to the Trustee, the Trustee shall mail to each Securityholder notice of the Default within 90 days after it occurs. Except in the case of a default in payment of principal or interest on a Series, the Trustee may withhold the notice if and so long as a committee of its Trust Officers in good faith determines that withholding the notice is in the interests of Securityholders of the Series. Section 9.06 Reports by Trustee to Holders. Within 60 days after each May 15 beginning with the May 15 following the date of this Indenture, the Trustee shall mail to each Securityholder, if required by TIA Section 313(a), a brief report dated as of such May 15 that complies with TIA Section 313(a). The Trustee also shall comply with TIA Section 313(b) and Section 313(c). 31 A copy of each report at the time of its mailing to Securityholders shall be filed with the SEC and each stock exchange on which the Securities are listed. The Company shall notify the Trustee when the Securities have been listed on any securities exchange. Section 9.07 Compensation and Indemnity. The Company and the Guarantor shall pay to the Trustee from time to time reasonable compensation for its services. The Trustee's compensation hereunder shall not be limited by any law on compensation relating to the trustee of an express trust. The Company and the Guarantor shall reimburse the Trustee upon request for all reasonable out-of-pocket expenses incurred by it. Such expenses shall include the reasonable compensation and expenses of the Trustee's agents and counsel. The Company and the Guarantor shall indemnify and hold harmless the Trustee against any loss or liability incurred by it in the acceptance or administration of this trust or the performance of its duties hereunder. The Trustee shall notify the Company and the Guarantor promptly of any claim for which it may seek indemnity. The Company and the Guarantor shall defend the claim and the Trustee shall cooperate in the defense. In the event that counsel to the Trustee shall advise counsel to the Company and the Guarantor that there may be defenses reasonably available to the Trustee different than or additional to those available to the Company and the Guarantor, then in such event the Trustee shall be permitted to employ counsel of its choosing at the expense of the Company and the Guarantor. The Company and the Guarantor need not pay for any settlement made without their consent. The Company and the Guarantor need not reimburse any expense or indemnify against any loss or liability incurred by the Trustee through negligence, bad faith or with willful misconduct. The indemnity contained in this Section 9.07 shall survive the resignation or removal of the Trustee and the termination of this Indenture. To ensure the Company's and the Guarantor's payment obligations in this Section, the Trustee shall have a claim prior to the Securities on all money or property held or collected by the Trustee, except that held in trust to pay principal and interest on particular Securities. When the Trustee incurs expenses or renders services after an Event of Default specified in Section 8.01(7) or (8) occurs, the expenses and the compensation for the services are intended to constitute expenses of administration under any Bankruptcy Law. Section 9.08 Replacement of Trustee. The Trustee may resign by so notifying the Company. The Holders of a majority in principal amount of the Securities may remove the Trustee by so notifying the Trustee to be removed and may appoint a successor Trustee with the Company's and the Guarantor's consent. The Company or the Guarantor may remove the Trustee if: (1) the Trustee fails to comply with Section 9.10; (2) the Trustee is adjudged a bankrupt or an insolvent; (3) a receiver or other public officer takes charge of the Trustee or its property; or 32 (4) the Trustee becomes incapable of acting. If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for any reason, the Company shall promptly appoint a successor Trustee. A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Company. Immediately after that, the retiring Trustee shall transfer all property held by it as Trustee to the successor Trustee (subject to the prior claim provided by Section 9.07). Any resignation or removal of the Trustee and any appointment of a successor Trustee shall become effective upon acceptance of appointment by the successor Trustee. The successor Trustee shall have all the rights, powers and duties of the Trustee under this Indenture. A successor Trustee shall mail notice of its succession to each Securityholder. If a successor Trustee does not take office within 60 days after the retiring Trustee resigns or is removed, the retiring Trustee (at the expense of the Company), the Company or the Holders of a majority in principal amount of the Securities may petition any court of competent jurisdiction for the appointment of a successor Trustee. If the Trustee fails to comply with Section 9.10, any Securityholder may, subject to Section 8.11, petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee. Section 9.09 Successor Trustee by Merger, etc. If the Trustee consolidates with, merges or converts into, or transfers all or substantially all of its corporate trust assets to, another corporation, the resulting, surviving or transferee corporation without any further act shall be the successor Trustee. Section 9.10 Eligibility; Disqualification. This Indenture shall always have a Trustee who satisfies the requirements of TIA Section 310(a)(1). The Trustee shall have a combined capital and surplus of at least $15,000,000 as set forth in the most recent published annual report of condition. The Trustee shall comply with TIA Section 310(b). Section 9.11 Preferential Collection of Claims Against Company. The Trustee shall comply with TIA Section 311(a), excluding any creditor relationship listed in TIA Section 311(b). A Trustee who has resigned or been removed shall be subject to TIA Section 311(a) to the extent indicated. ARTICLE 10. CONVERSION OF SECURITIES Section 10.01 Applicability of Article. Securities of any Series which are convertible into Common Stock at the option of the Holder shall be convertible in accordance with their terms and unless the Authorizing Resolution provides otherwise, in accordance with this Article. Each reference in this Article 10 to "a Security" or "the Securities" refers to the Securities of the particular Series that is convertible into Common Stock. If more than one Series of Securities with conversion privileges are outstanding at any time, the provisions of this Article 10 shall be applied separately to each such Series. 33 Section 10.02 Conversion Privilege. Subject to and upon compliance with the provisions of this Article 10, the Holder of any Security so designated shall have the right, at its, his or her option, at any time prior to the close of business on the date specified in the Securities of such Series (or if such Security or portion thereof is called for redemption prior to such date, then in respect of such Security or portion thereof to and including but not after the close of business on the second day (or, if such day is not a Business Day, then on the next following Business Day) preceding the date fixed for such redemption) to convert the principal amount of any such Security, or any portion of such principal amount which is $1,000 or an integral multiple thereof, into that number of fully paid and non-assessable shares of the Guarantor's Common Stock (calculated as to each conversion to the nearest 1/100th of a share) obtained by dividing the principal amount of the Security or portion thereof to be converted by the Conversion Price and by surrender of the Security so to be converted in whole or in part, such surrender to be made in the manner provided in Section 10.03. Notwithstanding the previous sentence, if the Company shall fail to redeem a Security which has been called for redemption, the Holder of such Security shall retain the right to convert such Security as provided in this Article 10. Section 10.03 Manner of Exercise of Conversion Privilege. In order to exercise a conversion privilege, the Holder of any Security to be converted in whole or in part shall surrender such Security at any of the offices or agencies to be maintained for such purpose by the Company pursuant to Section 2.03, and shall give notice to the Company and the Guarantor in the form provided in the Security, duly executed, at such office or agency that the Holder elects to convert such Security or the portion thereof specified in said notice. Such notice shall also state the name or names, together with the address or addresses, in which the certificate or certificates for shares of Common Stock which shall be issuable on such conversion shall be issued. Each Security surrendered for conversion shall, unless the shares issuable on conversion are to be issued in the same name as the name in which such Security is registered, be accompanied by instruments of transfer, in form satisfactory to the Guarantor, duly executed by the Holder or its, his or her duly authorized attorney. Securities so surrendered during the period from the close of business on a Record Date, or the next preceding Business Day if such Record Date is not a Business Day, preceding any Interest Payment Date to the opening of business on such Interest Payment Date (excluding Securities or portions thereof called for redemption during such period) shall also be accompanied by payment in next-day funds or other funds acceptable to the Guarantor of an amount equal to the interest payable on such Interest Payment Date on the principal amount of such Security then being converted; provided, however, that, if the Company shall default on the payment of said interest, said funds shall be returnable to the payor thereof. As promptly as practicable after the surrender of such Security, as aforesaid, the Guarantor shall issue and shall deliver at such office or agency to such Holder, or on its, his or her written order, a certificate or certificates for the number of full shares of Common Stock issuable upon the conversion of such Security or portion thereof in accordance with the provisions of this Article 10 and any fractional interest in respect of a share of Common Stock arising upon such conversion shall be settled as provided in Section 10.04. In case any Security of a denomination greater than $1,000 shall be surrendered for partial conversion, the Company and the Guarantor shall execute and the Trustee shall authenticate and deliver to or upon the order of the Holder of the Security so surrendered, at the expense of the Company, a new Security or Securities and Guarantee or Guarantees in authorized denominations in an aggregate principal amount equal to the unconverted portion of the surrendered Security. Such conversion shall be deemed 34 to have been effected immediately prior to the close of business on the date on which such Security shall have been surrendered and such notice received by the Company and the Guarantor as aforesaid, and the Person or Persons in whose name or names any certificate or certificates for shares of Common Stock shall be issuable upon such conversion shall be deemed to have become the holder or holders of record of the shares represented thereby at such time and such conversion shall be at the Conversion Price in effect at such time, unless the stock transfer books of the Guarantor shall be closed on that date, in which event such Person or Persons shall be deemed to have become such holder or holders of record at the close of business on the next succeeding day on which such stock transfer books are open, but such conversion shall be at the Conversion Price in effect on the date upon which such Security shall have been surrendered and such notice received by the Company and the Guarantor. Subject to the aforesaid requirement for a payment in the event of conversion after the close of business on a Record Date preceding an Interest Payment Date, no payment or adjustment shall be made on conversion for interest accrued on the Securities surrendered for conversion or for dividends on the Common Stock delivered on such conversion. Section 10.04 Payment in Lieu of Fractional Shares. No fractional shares of Common Stock shall be issued upon conversion of the Securities. Instead of any fractional interest in a share of Common Stock which would otherwise be deliverable upon the conversion of any Security or Securities, the Company and/or the Guarantor shall make an adjustment therefor to the nearest 1/100th of a share in cash at the Current Market Price thereof at the close of business on the Business Day next preceding the day of conversion. If more than one Security shall be surrendered for conversion at one time by the same Holder, the number of full shares issuable upon conversion thereof shall be computed on the basis of the aggregate principal amount of the Securities, or specified portions thereof to be converted, so surrendered. Section 10.05 Adjustment of Conversion Price. The Conversion Price shall be adjusted from time to time as follows: (a) In case the Guarantor shall hereafter (i) pay a dividend or make a distribution on its Common Stock in shares of Common Stock, (ii) subdivide its outstanding shares of Common Stock into a greater number of shares, (iii) combine its outstanding shares of Common Stock into a smaller number of shares, or (iv) issue by reclassification of its Common Stock any shares of Capital Stock of the Guarantor, the Conversion Price in effect immediately prior to such action shall be adjusted so that the Holder of any Security thereafter surrendered for conversion shall be entitled to receive the number of shares of Common Stock or other Capital Stock of the Guarantor which he would have owned immediately following such action had such Security been converted immediately prior thereto. An adjustment made pursuant to this subsection (a) shall become effective immediately after the record date in the case of a dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or reclassification. If, as a result of an adjustment made pursuant to this subsection (a), the Holder of any Security thereafter surrendered for conversion shall become entitled to receive shares of two or more classes of Capital Stock or shares of Common Stock and other Capital Stock of the Guarantor, the Board of Directors (whose determination shall be conclusive and shall be described in a statement filed with the Trustee and with the Registrar) shall determine in an equitable manner the allocation of the adjusted Conversion Price between or among shares of such classes of Capital Stock or shares of Common Stock and other Capital Stock. 35 (b) In case the Guarantor shall hereafter issue rights or warrants to holders of its outstanding shares of Common Stock generally entitling them (for a period expiring within 45 days after the record date mentioned below) to subscribe for or purchase shares of Common Stock at a price per share less than the Current Market Price per share of the Common Stock on the record date mentioned below, the Conversion Price of the shares of Common Stock shall be adjusted so that the same shall equal the price determined by multiplying the Conversion Price in effect immediately prior to the date of issuance of such rights or warrants by a fraction of which the numerator shall be the number of shares of Common Stock outstanding on the date of issuance of such rights or warrants plus the number of shares which the aggregate offering price of the total number of shares so offered would purchase at such Current Market Price, and of which the denominator shall be the number of shares of Common Stock outstanding on the date of issuance of such rights or warrants plus the number of additional shares of Common Stock offered for subscription or purchase. Such adjustment shall become effective immediately after the record date for the determination of shareholders entitled to receive such rights or warrants. (c) In case the Guarantor shall hereafter distribute to holders of its outstanding Common Stock generally evidences of its indebtedness or assets (excluding any cash dividend paid from retained earnings of the Guarantor and dividends or distributions payable in stock for which adjustment is made pursuant to subsection (a) of this Section 10.05) or rights or warrants to subscribe to securities of the Guarantor (excluding those referred to in subsection (b) of this Section 10.05), then in each such case the Conversion Price of the shares of Common Stock shall be adjusted so that the same shall equal the price determined by multiplying the Conversion Price in effect immediately prior to the date of such distribution by a fraction of which the numerator shall be the Current Market Price per share of the Common Stock on the record date mentioned below less the then fair market value (as determined by the Board of Directors, whose determination shall be conclusive and shall be described in a statement filed with the Trustee and with the Registrar) of the portion of the evidences of indebtedness or assets so distributed to the holder of one share of Common Stock or of such subscription rights or warrants applicable to one share of Common Stock, and of which the denominator shall be such Current Market Price per share of Common Stock. Such adjustment shall become effective immediately after the record date for the determination of shareholders entitled to receive such distribution. (d) In any case in which this Section 10.05 shall require that an adjustment be made immediately following a record date, the Guarantor may elect to defer (but only until five Business Days following the filing by the Company with the Trustee and the Registrar of the certificate of independent public accountants described in subsection (f) of this Section 10.05) issuing to the Holder of any Security converted after such record date the shares of Common Stock issuable upon such conversion over and above the shares of Common Stock issuable upon such conversion on the basis of the Conversion Price prior to adjustment. 36 (e) No adjustment in the Conversion Price shall be required unless such adjustment would require an increase or decrease of at least 1% of such price; provided, however, that any adjustments which by reason of this subsection (e) are not required to be made shall be carried forward and taken into account in any subsequent adjustment, and provided further that adjustment shall be required and made in accordance with the provisions of this Article 10 (other than this subsection (e)), not later than such time as may be required in order to preserve the tax-free nature of a distribution to the holders of Securities or Common Stock. All calculations under this Section 10.05 shall be made to the nearest cent or to the nearest 1/100th of a share, as the case may be. Anything in this Section 10.05 to the contrary notwithstanding, the Guarantor shall be entitled to make such reductions in the Conversion Price, in addition to those required by this Section 10.05, as it in its discretion shall determine to be advisable in order that any stock dividend, subdivision of shares, distribution of rights to purchase stock or securities, or distribution of securities convertible into or exchangeable for stock hereafter made by the Guarantor to its shareholders shall not be taxable. (f) Whenever the Conversion Price is adjusted as herein provided, (i) the Company and the Guarantor shall promptly file with the Trustee and the Registrar a certificate of a firm of independent public accountants setting forth the Conversion Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment and the manner of computing the same, which certificate shall be conclusive evidence of the correctness of such adjustment and (ii) a notice stating that the Conversion Price has been adjusted and setting forth the adjusted Conversion Price shall forthwith be given by the Company and the Guarantor to the Holders in the manner provided in Section 13.02. Subject to TIA Section 315(a), (c) and (d), the Trustee and any conversion agent shall be under no duty or responsibility with respect to any such certificate or the certificate provided for in Section 10.10 except to exhibit the same from time to time to any Holder of a Security desiring an inspection of such certificate. (g) In the event that at any time as a result of an adjustment made pursuant to subsection (a) of this Section 10.05, the Holder of any Security thereafter surrendered for conversion shall become entitled to receive any shares of the Guarantor other than shares of Common Stock, thereafter the Conversion Price of such other shares so receivable upon conversion of any Security shall be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to Common Stock contained in this Article 10. Section 10.06 Notice of Certain Corporate Action. In the event: (a) the Guarantor shall take any action which would require an adjustment in the Conversion Price pursuant to Section 10.05(c); or (b) the Guarantor shall authorize the granting to the holders of its Common Stock (as a class) of rights or warrants to subscribe for or purchase any shares of stock of any class or of any other rights; or (c) there shall be any capital reorganization or reclassification of the Common Stock (other than a subdivision or combination of the outstanding Common Stock and other than a change in the par value of the Common Stock), or any consolidation or merger to which the Guarantor is a party or any statutory exchange of securities with another corporation and for which approval of any shareholders of the Guarantor is required, or any sale or transfer of all or substantially all of the assets of the Guarantor; or 37 (d) there shall be a voluntary or involuntary dissolution, liquidation or winding-up of the Guarantor; then the Company and the Guarantor shall cause to be filed with the Trustee and the Registrar, and shall cause to be given to the Holders, in the manner provided in Section 13.02, at least 14 days prior to the applicable date hereinafter specified, a notice stating (i) the date on which a record is to be taken for the purpose of such distribution or rights, or, if a record is not to be taken, the date as of which the holders of Common Stock of record to be entitled to such distribution or rights are to be determined, or (ii) the date on which such reorganization, reclassification, consolidation, merger, sale, transfer, dissolution, liquidation or winding-up is expected to become effective, and the date as of which it is expected that holders of Common Stock of record shall be entitled to exchange their shares of Common Stock for securities or other property deliverable upon such reorganization, reclassification, consolidation, merger, sale, transfer, dissolution, liquidation or winding-up. Failure to give such notice or any defect therein shall not affect the legality or validity of the proceedings described in subsection (a), (b), (c) or (d) of this Section 10.06. Section 10.07 Guarantor To Provide Stock. The Guarantor covenants that it will at all times reserve and keep available, free from preemptive rights, out of the aggregate of its authorized but unissued shares of Common Stock or its issued shares of Common Stock held in its treasury, or both, for the purpose of effecting conversions of Securities, the full number of shares of Common Stock deliverable upon the conversion of all outstanding Securities not theretofore converted. For purposes of this Section 10.07, the number of shares of Common Stock which shall be deliverable upon the conversion of all outstanding Securities shall be computed as if at the time of computation all outstanding Securities were held by a single Holder. Before taking any action which would cause an adjustment reducing the Conversion Price below the then par value (if any) of the shares of Common Stock deliverable upon conversions of the Securities, the Guarantor will take any corporate action which may, in the opinion of its counsel, be necessary in order that the Guarantor may validly and legally issue fully paid and non-assessable shares of Common Stock at such adjusted Conversion Price. The Guarantor will endeavor to list the shares of Common Stock required to be delivered upon conversion of Securities prior to such delivery upon each national securities exchange, if any, upon which the outstanding Common Stock is listed at the time of such delivery. Prior to the delivery of any securities which the Guarantor shall be obligated to deliver upon conversion of the Securities, the Guarantor will endeavor to comply with all federal and state laws and regulations thereunder requiring the registration of such securities with, or any approval of or consent to the delivery thereof by, any governmental authority. Section 10.08 Taxes on Conversions. The Company and/or the Guarantor will pay any and all documentary stamp or similar issue or transfer taxes payable in respect of the issue or delivery of shares of Common Stock on conversions of Securities pursuant hereto; provided, however, that neither the Company nor the Guarantor shall be required to pay any tax which may be payable in respect of any transfer involved in the issue or delivery of shares of Common Stock in a name other than that of the Holder of the Securities to be converted and no such issue or delivery shall be made unless and until the person requesting such issue or delivery has paid to the Company and/or the Guarantor the amount of any such tax or has established, to the satisfaction of the Company and the Guarantor, that such tax has been paid. 38 Section 10.09 Covenant as to Stock. The Guarantor covenants that all shares of Common Stock which may be delivered upon conversions of Securities will upon delivery be duly and validly issued and fully paid and non-assessable, free of all liens and charges and not subject to any preemptive rights. Section 10.10 Consolidation or Merger. Notwithstanding any other provision herein to the contrary, in case of any consolidation or merger to which the Guarantor is a party other than a merger or consolidation in which the Guarantor is the continuing corporation, or in case of any sale or conveyance to another corporation of the property of the Guarantor as an entirety or substantially as an entirety, or in the case of any statutory exchange of securities with another corporation (including any exchange effected in connection with a merger of a third corporation into the Guarantor), there shall be no adjustments under Section 10.05 but the Holder of each Security then outstanding shall have the right thereafter to convert such Security into the kind and amount of securities, cash or other property which he would have owned or have been entitled to receive immediately after such consolidation, merger, statutory exchange, sale or conveyance had such Security been converted immediately prior to the effective date of such consolidation, merger, statutory exchange, sale or conveyance and in any such case, if necessary, appropriate adjustment shall be made in the application of the provisions set forth in this Article 10 with respect to the rights and interests thereafter of the Holders of the Securities, to the end that the provisions set forth in this Article 10 shall thereafter correspondingly be made applicable, as nearly as may reasonably be, in relation to any shares of stock or other securities or property thereafter deliverable on the conversion of the Securities. Any such adjustment shall be made by and set forth in a supplemental indenture executed by the Company, the Guarantor and the Trustee and approved by a firm of independent public accountants, evidenced by a certificate to that effect; and any adjustment so approved shall for all purposes hereof conclusively be deemed to be an appropriate adjustment. The above provisions of this Section 10.10 shall similarly apply to successive consolidations, mergers, statutory exchanges, sales or conveyances. The Company shall give notice of the execution of such a supplemental indenture to the Holders of Securities in the manner provided in Section 13.02 within 30 days after the execution thereof. The Trustee shall not be under any responsibility to determine the correctness of any provisions contained in such supplemental indenture relating either to the kind or amount of shares of stock or securities or property receivable by Holders upon the conversion of their Securities after any such consolidation, merger, statutory exchange, sale or conveyance, or to any adjustment to be made with respect thereto. 39 Section 10.11 Disclaimer of Responsibility for Certain Matters. Neither the Trustee nor the Registrar shall at any time be under any duty or responsibility to any Holder of Securities to determine whether any facts exist which may require any adjustment of the Conversion Price, or with respect to the nature or extent of any such adjustment when made, or with respect to the method employed, or herein or in any supplemental indenture provided to be employed, in making the same. Neither the Trustee nor the Registrar shall be accountable with respect to the listing or registration referred to in Section 10.07 or the validity or value (or the kind or amount) of any shares of Common Stock, or of any securities or property, which may at any time be issued or delivered upon the conversion of any Security; and neither the Trustee nor the Registrar makes any representation with respect thereto. Neither the Trustee nor the Registrar shall be responsible for any failure of the Guarantor to issue, transfer or deliver any shares of Common Stock or stock certificates or other securities or property or to make any cash payment upon the surrender of any Security for the purpose of conversion or, subject to TIA Section 315(a), (c) and (d), to comply with any of the covenants contained in this Article 10. ARTICLE 11. DISCHARGE OF INDENTURE Section 11.01 Termination of the Company's and the Guarantor's Obligations. Securities of a Series may be defeased in accordance with their terms and, unless the Authorizing Resolution provides otherwise, in accordance with this Article. The Company may terminate all of its obligations under the Securities of a Series and this Indenture, to the extent its obligations under this Indenture relate to that Series, and the obligations of the Guarantor shall terminate if all Securities of a Series previously authenticated and delivered (other than destroyed, lost or stolen Securities which have been replaced or paid) have been delivered to the Trustee for cancellation or if: (1) the Securities mature within one year or all of them are to be called for redemption within one year under arrangements satisfactory to the Trustee for giving the notice of redemption; and (2) the Company irrevocably deposits in trust with the Trustee money sufficient to pay principal of and interest on the outstanding Securities to maturity or redemption, as the case may be. The Company may make the deposit only if Article 6 permits it. Immediately after making the deposit, the Company shall give notice of such event and proposed date of payment to each Securityholder. The Company's obligations and, to the extent applicable, the Guarantor's obligations, in Sections 2.05, 2.06, 2.07, 2.08, 2.09, 4.01, 9.07, 9.08 and 11.03 and Article 10, however, shall survive until the Securities are no longer outstanding. Thereafter, the Company's obligations and, to the extent applicable, the Guarantor's obligations, in Sections 9.07 and 11.03 shall survive. After a deposit, the Trustee upon request shall acknowledge in writing the discharge of the Company's obligations under the Securities, the Guarantor's obligations under the Guarantee and their obligations under the Indenture except for those surviving obligations specified above. 40 Section 11.02 Application of Trust Money. The Trustee shall hold in trust money deposited with it pursuant to Section 11.01. It shall apply the deposited money through the Paying Agent and in accordance with this Indenture to the payment of principal and interest on the Securities. Section 11.03 Repayment to Company. The Trustee and the Paying Agent shall promptly pay to the Company upon request any excess money held by them at any time. The Trustee and the Paying Agent shall pay to the Company upon request any money held by them for the payment of principal or interest (including interest, if any, earned on such money) that remains unclaimed for two years; provided, however, that the Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of the Company cause to be published once in a newspaper of general circulation in The City of New York or mail to each Holder notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such publication or mailing, any unclaimed balance of such money then remaining will be repaid to the Company. After payment to the Company, Securityholders entitled to any of such money must look to the Company or, if applicable, the Guarantor for payment as general creditors unless applicable abandoned property law designates another person and all liability of the Trustee or Paying Agent with respect to such money shall thereupon cease. ARTICLE 12. AMENDMENTS, SUPPLEMENTS AND WAIVERS Section 12.01 Without Consent of Holders. The Company may amend or supplement this Indenture or the Securities without notice to or consent of any Securityholder: (1) to cure any ambiguity, defect or inconsistency; (2) to comply with Section 5.01; (3) to provide for uncertificated Securities in addition to or in place of certificated Securities; or (4) to make any change that does not adversely affect the rights of any Securityholder. Section 12.02 With Consent of Holders. The Company may amend or supplement this Indenture or the Securities without notice to any Securityholder but with the written consent of the Holders of at least a majority in principal amount of the Securities of all Series affected by the amendment voting as a class. The Holders of a majority in principal amount of the Securities may waive compliance by the Company with any provision of this Indenture or the Securities without notice to any Securityholder. However, without the consent of each Securityholder affected, an amendment, supplement or waiver, including a waiver pursuant to Section 8.04, may not: (1) reduce the amount of Securities whose Holders must consent to an amendment, supplement or waiver; 41 (2) reduce the rate of or extend the time for payment of interest on any Security; (3) reduce the principal of or extend the fixed maturity of any Security or alter the redemption provisions with respect thereto; (4) waive a default in the payment of the principal of or interest on any Security; (5) modify the provisions of Article 6 (subordination) or Article 7 (guarantee) in a manner adverse to the Holders; (6) make any security payable in money other than that stated in the Security; (7) if applicable, make any change that adversely affects the right to convert or the Conversion Price for any Security; or (8) make any change in Section 8.04 or 8.07 or this Section 12.02. After an amendment under this Section 12.02 becomes effective, the Company shall mail to the Holders a notice briefly describing the amendment. Section 12.03 Compliance with Trust Indenture Act. Every amendment to or supplement of this Indenture or the Securities shall comply with the TIA as then in effect. Section 12.04 Revocation and Effect of Consents. A consent to an amendment, supplement or waiver by a Holder of a Security shall bind the Holder and every subsequent Holder of a Security or portion of a Security that evidences the same debt as the consenting Holder's Security, even if notation of the consent is not made on any Security. However, any such Holder or subsequent Holder may revoke the consent as to the Security or portion of a Security of such Holder. The Trustee must receive the notice of revocation before the date the amendment, supplement or waiver becomes effective. After an amendment, supplement or waiver becomes effective, it shall bind every Securityholder unless it makes a change described in clauses (1) through (8) of Section 12.02. In that case the amendment, supplement or waiver shall bind each Holder of a Security who has consented to it and every subsequent Holder of a Security or portion of a Security that evidences the same debt as the consenting Holder's Security. Section 12.05 Notation on or Exchange of Securities. If an amendment, supplement or waiver changes the terms of a Security, the Trustee may require the Holder of the Security to deliver it to the Trustee. The Trustee may place an appropriate notation on the Security about the changed terms and return it to the Holder. Alternatively, if the Company or the Trustee so determine, the Company in exchange for the Security shall issue and the Trustee shall authenticate, a new Security that reflects the changed terms. 42 Section 12.06 Trustee To Sign Amendments, etc. The Trustee shall sign any amendment, supplement or waiver authorized pursuant to this Article if the amendment, supplement or waiver does not adversely affect the rights or duties of the Trustee. If it does, the Trustee may but need not sign it. In signing any amendment, supplement or waiver, the trustee may rely on an Opinion of Counsel which shall state that such amendment, supplement or waiver is permitted under this Article 12. ARTICLE 13. MISCELLANEOUS Section 13.01 Trust Indenture Act Controls. If any provision of this Indenture limits, qualifies, or conflicts with another provision which is required to be included in this Indenture by the TIA or the TIA as amended after the date hereof, the required provision shall control. Section 13.02 Notices. Any notice or communication shall be sufficiently given if in writing and delivered in person or mailed by first-class mail addressed as follows: if to the Company or the Guarantor: Toll Brothers, Inc., 3103 Philmont Avenue, Huntingdon Valley, Pennsylvania 19006 Attention: Chief Financial Officer with a copy to: Mark K. Kessler, Esquire Wolf, Block, Schorr and Solis-Cohen LLP 1650 Arch Street, 22nd Floor Philadelphia, PA 19103-2097 if to the Trustee: Bank One Trust Company, NA 1111 Polaris Parkway, Suite 1K Columbus, OH 43420 Attention: Corporate Trust Securities Division The Company, the Guarantor or the Trustee by notice to the other may designate additional or different addresses for subsequent notices or communications. Any notice or communication mailed to a Securityholder shall be mailed to him at his address as it appears on the registration books of the Registrar and shall be sufficiently given to him if so mailed within the time prescribed. In addition, a copy of each such notice or communication shall be mailed to the Trustee at the address specified above. Failure to mail a notice or communication to a Securityholder or any defect in it shall not affect its sufficiency with respect to other Securityholders. If a notice or communication is mailed in the manner provided above, it is duly given, whether or not the addressee receives it. If the Company or the Guarantor mails a notice or communication to Securityholders, it shall mail a copy of such notice to the Trustee and each agent at the same time. 43 Section 13.03 Communication by Holders with Other Holders. Securityholders may communicate pursuant to TIA Section 312(b) with other Securityholders with respect to their rights under this Indenture or the Securities. The Company, the Guarantor, the Trustee, the Registrar and anyone else shall have the protection of TIA Section 312(c). Section 13.04 Certificate and Opinion as to Conditions Precedent. Upon any request or application by the Company to the Trustee to take any action under this Indenture, the Company shall furnish to the Trustee: (1) an Officers' Certificate stating that, in the opinion of the signers, all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with; and (2) an Opinion of Counsel stating that, in the opinion of such counsel, all such conditions precedent have been complied with. Section 13.05 Statements Required in Certificate or Opinion. Each certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture shall include: (1) a statement that the person making such certificate or opinion has read such covenant or condition; (2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (3) a statement that, in the opinion of such person, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and (4) a statement as to whether or not, in the opinion of such person, such condition or covenant has been complied with. Section 13.06 When Treasury Securities Disregarded. In determining whether the Holders of the required principal amount of Securities of a Series have concurred in any direction, waiver or consent, Securities of the Series owned by the Company or the Guarantor or by any person directly or indirectly controlling or controlled by or under direct or indirect common control with the Company or the guarantor shall be disregarded, except that for the purposes of determining whether the Trustee shall be protected in relying on any such direction, waiver or consent, only Securities of the Series which the Trustee knows are so owned shall be so disregarded. 44 Section 13.07 Rules by Trustee, Paying Agent, Registrar. The Trustee may make reasonable rules for action by or a meeting of Securityholders. The Paying Agent or Registrar each may make reasonable rules for its functions. Section 13.08 Legal Holidays. A "Legal Holiday" is a Saturday, a Sunday, a legal holiday or a day on which banking institutions are not required to be open. If a payment date is a Legal Holiday at a place of payment, payment may be made at that place on the next succeeding day that is not a Legal Holiday, and no interest shall accrue for the intervening period. Section 13.09 Governing Law. The laws of the State of New York shall govern this Indenture, the Securities and the Guarantee without regard to principles of conflicts of law. Section 13.10 No Adverse Interpretation of Other Agreements. This Indenture may not be used to interpret another indenture, loan or debt agreement of the Company, the Guarantor or a Subsidiary. Any such indenture, loan or debt agreement may not be used to interpret this Indenture. Section 13.11 No Recourse Against Others. All liability described in paragraph 20 of the Securities of any director, officer, employee or shareholder, as such, of the Company or the Guarantor is waived and released. Section 13.12 Successors. All agreements of the Company or the Guarantor in this Indenture and the Securities shall bind its successor. All agreements of the Trustee in this Indenture shall bind its successor. Section 13.13 Duplicate Originals. The parties may sign any number of copies of this Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. Section 13.14 Counterparts. This Indenture may be executed in any number of counterparts, all of which shall together constitute one and the same instrument. This Indenture shall become binding when one or more counterparts hereof, individually or taken together, shall bear the signatures of all of the parties reflected hereon as the signatories. 45 SIGNATURES Dated: TOLL FINANCE CORP., as Issuer By: -------------------------------- Name: (SEAL) Title: Attest: - ----------------------------- Name: Title: Dated: TOLL BROTHERS, INC., as Guarantor By: -------------------------------- Name: (SEAL) Title: Attest: - ----------------------------- Name: Title: Dated: BANK ONE TRUST COMPANY, NA, as Trustee By: -------------------------------- Name: (SEAL) Title: Attest: - ----------------------------- Name: Title: S-1 EX-5 6 b317330_ex5.txt EXHIBIT 5 EXHIBIT 5 WOLF, BLOCK, SCHORR AND SOLIS-COHEN LLP 1650 Arch Street Philadelphia, PA 19103-2097 __________, 2002 Toll Brothers, Inc. Toll Corp. Toll Finance Corp. First Huntingdon Finance Corp. 3103 Philmont Avenue Huntingdon Valley, PA 19006 RE: Registration Statement on Form S-3 ---------------------------------- Gentlemen: As counsel for Toll Brothers, Inc., a Delaware corporation (the "Company"), and its wholly owned subsidiaries, Toll Corp., a Delaware corporation ("Toll"), Toll Finance Corp., a Delaware corporation ("TFC"), and First Huntingdon Finance Corp., a Delaware corporation ("FHFC"), we have assisted in the preparation of a Registration Statement on Form S-3 (together with all exhibits thereto and documents incorporated by reference therein, the "Registration Statement") in the form proposed to be filed by the Company, Toll, TFC and FHFC (collectively, the "Registrants") with the Securities and Exchange Commission (the "Commission"). The Registration Statement relates to the issuance and sale from time to time, pursuant to Rule 415 of the General Rules and Regulations of the Commission promulgated under the Securities Act of 1933, as amended (the "Securities Act"), of the following securities of the Registrants with an aggregate initial public offering price of up to $750,000,000 or the equivalent thereof in one or more foreign currencies or composite currencies: (i) debt securities of Toll ("Toll Debt Securities"), TFC ("TFC Debt Securities") and FHFC ("FHFC Debt Securities" and, collectively with the Toll Debt Securities and the TFC Debt Securities, the "Debt Securities"), which may be any of senior secured debt securities, senior unsecured debt securities, senior subordinated debt securities or subordinated debt securities, in one or more series, which in each case are to be issued under an indenture (an "Indenture" and, collectively with any other indentures relating to other Debt Securities and/or Additional Debt Securities (as defined), the "Indentures") to be entered into among the issuer of the Debt Securities, the Company and Banc One Trust Company, NA or another institution designated prior to the issuance of any Debt Securities under such Indenture to serve as trustee thereunder (a "Trustee" and, collectively with the trustees, if any, under other Indentures, the "Trustees"); (ii) the Company's unconditional and irrevocable guarantees of Debt Securities (the "Guarantees"); (iii) shares of the Company's Common Stock, $.01 par value (the "Common Stock"); (iv) shares of the Company's Preferred Stock, $.01 par value (the "Preferred Stock"), in one or more series; (v) warrants to purchase Debt Securities (the "Debt Warrants") to be issued pursuant to a warrant agreement relating to Debt Warrants and/or Additional Debt Warrants (as defined), as the case may be (the "Debt Warrant Agreement"), between the issuer of Debt Securities and/or the Additional Debt Securities, as the case may be, to which the Debt Warrants and/or the Additional Debt Warrants relate, the Company and a warrant agent (the "Debt Warrant Agent") to be appointed prior to the issuance of Debt Warrants or Additional Debt Warrants; (vi) warrants to purchase Common Stock (the "Common Stock Warrants") to be issued pursuant to a warrant agreement relating to Common Stock Warrants and/or Additional Common Stock Warrants (as defined), as the case may be (the "Common Stock Warrant Agreement"), between the Company and a warrant agent (the "Common Stock Warrant Agent") to be appointed prior to the issuance of Common Stock Warrants or Additional Common Stock Warrants; and (vii) warrants to purchase Preferred Stock (the "Preferred Stock Warrants", and, together with the Debt Warrants and the Common Stock Warrants, the "Warrants") to be issued pursuant to a warrant agreement relating to Preferred Stock Warrants and/or Additional Preferred Stock Warrants (as defined), as the case may be (the "Preferred Stock Warrant Agreement"), between the Company and a warrant agent (the "Preferred Stock Warrant Agent") to be appointed prior to the issuance of Preferred Stock Warrants or Additional Preferred Stock Warrants. The Debt Securities, the Guarantees, the Common Stock, the Preferred Stock and the Warrants are collectively referred to herein as the "Offered Securities." This opinion is being delivered in accordance with the requirements of Item 601(b)(5) of Regulation S-K promulgated under the Securities Act. For the purpose of rendering this opinion, we have examined (i) the Registration Statement relating to the Offered Securities; (ii) the respective forms of Indenture relating to the Toll Debt Securities and related Guarantees (the "Toll Indenture"), the TFC Debt Securities and related Guarantees (the "TFC Indenture") and the FHFC Debt Securities and related Guarantees (the "FHFC Indenture"), each of which is being filed as an exhibit to the Registration Statement; (iii) the Restated Articles of Incorporation of the Company, as amended to date (the "Articles of Incorporation"); (iv) the Bylaws of the Company as currently in effect (the "Bylaws"); and (v) certain resolutions adopted by the respective Boards of Directors of the Company (the "Company Board"), Toll (the "Toll Board"), TFC (the "TFC Board") and FHFC (the "FHFC Board" and, collectively with the Company Board, the Toll Board and the TFC Board, the "Registrants' Boards") relating to the issuance of the Offered Securities and the authorization of the filing of an additional registration statement (the "Additional Registration Statement") for the purpose of registering for issuance and sale an additional amount of Offered Securities pursuant to Rule 462(b) under the Securities Act (the "Additional Offered Securities"). The Additional Offered Securities may consist of one or more of the following: additional Debt Securities ("Additional Debt Securities"), which may consist of additional Toll Debt Securities ("Additional Toll Debt Securities"), additional TFC Debt Securities ("Additional TFC Debt Securities") or additional FHFC Debt Securities ("Additional FHFC Debt Securities"), additional Guarantees ("Additional Guarantees"), additional Common Stock ("Additional Common Stock"), additional Preferred Stock ("Additional Preferred Stock"), additional Debt Warrants ("Additional Debt Warrants"), additional Common Stock Warrants ("Additional Common Stock Warrants") and additional Preferred Stock Warrants ("Additional Preferred Stock Warrants"). We have also examined originals or copies, certified or otherwise identified to our satisfaction, of such records of the Registrants and such agreements, certificates of public officials, certificates of officers or other representatives of the Registrants and others and such other documents, certificates and records as we have deemed necessary or appropriate as a basis for the opinions set forth herein. In our examination, we have assumed without independent verification (i) the legal capacity of all natural persons, (ii) the genuineness of all signatures, (iii) the authenticity of all documents submitted to us as originals, (iv) the conformity to original documents of all documents submitted to us as certified, conformed or photostatic copies and the authenticity of the originals of such latter documents and (v) the power and authority of all persons other than the Registrants signing such documents to execute, deliver and perform such documents, and the valid authorization, execution and delivery of such documents by such other persons. As to any facts material to the opinions expressed herein which were not independently established or verified, we have relied upon oral or written statements and representations of officers or other representatives of the Registrants and others. We are admitted to practice before the bar in the Commonwealth of Pennsylvania and in the States of Delaware and New York and we do not express any opinion as to the laws of any other jurisdiction other than the federal laws of the United States of America to the extent referred to specifically herein. The Offered Securities and any Additional Offered Securities may be issued from time to time on a delayed or continuous basis, and this opinion is limited to the laws, including applicable rules and regulations, in effect on the date hereof. We assume no obligation to update this opinion. -2- Based upon and subject to the foregoing, such examinations of law and such other matters as we have deemed relevant under the circumstances, we are of the opinion that, as of the date hereof: 1. The form of Toll Indenture filed as an exhibit to the Registration Statement (the "Basic Toll Indenture") has been duly authorized by the Toll Board. The Basic Toll Indenture and each other Indenture in the form of the Basic Toll Indenture, as modified in accordance with duly adopted resolutions of the Toll Board and the Company Board (in each case, including any appropriate committee appointed thereby) to reflect the additional terms applicable to the Toll Debt Securities and/or any Additional Toll Debt Securities and Guarantees and/or any Additional Guarantees to which such Indenture relates, when executed and delivered by Toll and the Company, will be a valid and binding agreement, enforceable against Toll and the Company in accordance with its terms, except to the extent that enforcement thereof may be limited by (a) bankruptcy, insolvency, reorganization, fraudulent transfer, moratorium or other similar laws now or hereafter in effect relating to or affecting creditors' rights generally, (b) general principles of equity (regardless of whether enforceability is considered in a proceeding at law or in equity) and (c) governmental authority to limit, delay or prohibit the making of payments outside the United States or in foreign currency or composite currency. 2. The form of TFC Indenture filed as an exhibit to the Registration Statement (the "Basic TFC Indenture") has been duly authorized by the TFC Board. The Basic TFC Indenture and each other Indenture in the form of the Basic TFC Indenture, as modified in accordance with duly adopted resolutions of the TFC Board and the Company Board (in each case, including any appropriate committee appointed thereby) to reflect the additional terms applicable to the TFC Debt Securities and/or any Additional TFC Debt Securities and Guarantees and/or any Additional Guarantees to which such Indenture relates, when executed and delivered by TFC and the Company, will be a valid and binding agreement, enforceable against TFC and the Company in accordance with its terms, except to the extent that enforcement thereof may be limited by (a) bankruptcy, insolvency, reorganization, fraudulent transfer, moratorium or other similar laws now or hereafter in effect relating to or affecting creditors' rights generally, (b) general principles of equity (regardless of whether enforceability is considered in a proceeding at law or in equity) and (c) governmental authority to limit, delay or prohibit the making of payments outside the United States or in foreign currency or composite currency. 3. The form of FHFC Indenture filed as an exhibit to the Registration Statement (the "Basic FHFC Indenture") has been duly authorized by the FHFC Board. The Basic FHFC Indenture and each other Indenture in the form of the Basic FHFC Indenture, as modified in accordance with duly adopted resolutions of the FHFC Board and the Company Board (in each case, including any appropriate committee appointed thereby) to reflect the additional terms applicable to the FHFC Debt Securities and/or any Additional FHFC Debt Securities and Guarantees and/or any Additional Guarantees to which such Indenture relates, when executed and delivered by FHFC and the Company, will be a valid and binding agreement, enforceable against FHFC and the Company in accordance with its terms, except to the extent that enforcement thereof may be limited by (a) bankruptcy, insolvency, reorganization, fraudulent transfer, moratorium or other similar laws now or hereafter in effect relating to or affecting creditors' rights generally, (b) general principles of equity (regardless of whether enforceability is considered in a proceeding at law or in equity) and (c) governmental authority to limit, delay or prohibit the making of payments outside the United States or in foreign currency or composite currency. -3- 4. With respect to any series of Debt Securities and/or Additional Debt Securities and the related Guarantees and/or Additional Guarantees (collectively, the "Offered Debt Securities"), when (i) if the Offered Debt Securities are to be sold pursuant to a firm commitment underwritten offering, the underwriting agreement with respect to the Offered Debt Securities (the "Debt Underwriting Agreement") has been duly authorized, executed and delivered by the issuer of the applicable Debt Securities and/or Additional Debt Securities, the Company and the other parties thereto; (ii) if the Offered Debt Securities are to be sold on an agency basis, the distribution agreement with respect to the Offered Debt Securities (the "Debt Distribution Agreement") has been duly authorized, executed and delivered by the issuer of the applicable Debt Securities and/or Additional Debt Securities, the Company and the other parties thereto; (iii) the Board of Directors of the issuer of the applicable Debt Securities and/or Additional Debt Securities and the Company Board, including in each case any appropriate committee appointed thereby, and appropriate officers of the issuer of the applicable Debt Securities and/or Additional Debt Securities and the Company have taken all necessary corporate action to approve the issuance and terms of the Offered Debt Securities and related matters; (iv) the terms of the Offered Debt Securities and of their issuance and sale have been duly established in conformity with the Indenture relating thereto so as not to violate any applicable law, the Articles of Incorporation or Bylaws of the issuer of the applicable Debt Securities and/or Additional Debt Securities or the Company or result in a default under or breach of any agreement or instrument binding upon the issuer of the applicable Debt Securities and/or Additional Debt Securities or the Company and so as to comply with any requirement or restriction imposed by any court or governmental body having jurisdiction over the issuer of the applicable Debt Securities and/or Additional Debt Securities or the Company; (v) the applicable Indenture has been duly executed and delivered by the issuer of the applicable Debt Securities and/or Additional Debt Securities, the Company and the Trustee thereunder; and (vi) the Offered Debt Securities have been duly executed and authenticated in accordance with the provisions of the applicable Indenture and duly delivered to the purchasers thereof upon payment of the agreed-upon consideration therefor, the Offered Debt Securities, when issued and sold in accordance with the applicable Indenture and the related Debt Underwriting Agreement or Debt Distribution Agreement, if any, or any other duly authorized, executed and delivered applicable purchase agreement, will be valid and binding obligations of the issuer of the applicable Debt Securities and/or Additional Debt Securities and the Company, enforceable against the issuer of the applicable Debt Securities and/or Additional Debt Securities and the Company in accordance with their respective terms, except to the extent that enforcement thereof may be limited by (a) bankruptcy, insolvency, reorganization, fraudulent transfer, moratorium or other similar laws now or hereafter in effect relating to or affecting creditors' rights generally, (b) general principles of equity (regardless of whether enforceability is considered in a proceeding at law or in equity) and (c) governmental authority to limit, delay or prohibit the making of payments outside the United States or in foreign currency or composite currency. We note that, as of the date hereof, a judgment for money in an action based on an Offered Debt Security denominated in a foreign currency, currency unit or composite currency in a federal or state court in the United States ordinarily would be enforced in the United States only in United States dollars. The date used to determine the rate of conversion of the foreign currency, currency unit or composite currency in which a particular Offered Debt Security is denominated into United States dollars will depend upon various factors, including which court renders the judgment. -4- 5. With respect to any shares of Common Stock and/or Additional Common Stock (collectively, the "Offered Common Stock"), when (i) if the Offered Common Stock is to be sold pursuant to a firm commitment underwritten offering, the underwriting agreement with respect to the Offered Common Stock (the "Common Stock Underwriting Agreement") has been duly authorized, executed and delivered by the Company and the other parties thereto; (ii) if the Offered Common Stock is to be sold on an agency basis, the distribution agreement with respect to the Offered Common Stock (the "Common Stock Distribution Agreement") has been duly authorized, executed and delivered by the Company and the other parties thereto; (iii) the Company Board, including any appropriate committee appointed thereby, and the appropriate officers of the Company have taken all necessary corporate action to approve the issuance and terms of issuance of the shares of Offered Common Stock in conformity with the Company's Articles of Incorporation and Bylaws, so as not to violate any applicable law, the Company's Articles of Incorporation or Bylaws or result in a default under or breach of any agreement or instrument binding upon the Company and so as to comply with any requirement or restriction imposed by any court or governmental body having jurisdiction over the Company; and (iv) certificates representing the shares of the Offered Common Stock are duly executed, countersigned, registered and delivered upon payment of the agreed-upon consideration therefor, the shares of the Offered Common Stock, when issued and sold in accordance with the related Common Stock Underwriting Agreement or Common Stock Distribution Agreement, if any, or any other duly authorized, executed and delivered applicable purchase agreement, will be duly authorized, validly issued, fully paid and nonassessable, provided that the consideration therefor is not less than the par value thereof. 6. With respect to the shares of any series of Preferred Stock and/or Additional Preferred Stock (collectively, the "Offered Preferred Stock"), when (i) if the Offered Preferred Stock is to be sold pursuant to a firm commitment underwritten offering, the underwriting agreement with respect to the shares of the Offered Preferred Stock (the "Preferred Stock Underwriting Agreement") has been duly authorized, executed and delivered by the Company and the other parties thereto; (ii) if the Offered Preferred Stock is to be sold on an agency basis, the distribution agreement with respect to the Offered Preferred Stock (the "Preferred Stock Distribution Agreement") has been duly authorized, executed and delivered by the Company and the other parties thereto; (iii) the Company Board, including any appropriate committee appointed thereby, and the appropriate officers of the Company have taken all necessary corporate action to approve the issuance and terms of the shares of the Offered Preferred Stock and related matters, including the adoption of a certificate of designations for the Offered Preferred Stock in the form required by applicable law (the "Certificate of Designations"); (iv) the filing of the Certificate of Designations with the Secretary of State of the State of Delaware has duly occurred; (v) the terms of the Offered Preferred Stock and of their issuance and sale have been duly established in conformity with the Company's Articles of Incorporation, the Certificate of Designations and the Company's Bylaws, so as not to violate any applicable law, the Company's Articles of Incorporation, the Certificate of Designations or the Company's Bylaws or result in a default under or breach of any agreement or instrument binding upon the Company and so as to comply with any requirement or restriction imposed by any court or governmental body having jurisdiction over the Company; and (vi) certificates representing the shares of the Offered Preferred Stock are duly executed, countersigned, registered and delivered upon payment of the agreed-upon consideration therefor, the shares of the Offered Preferred Stock, when issued and sold in accordance with the related Preferred Stock Underwriting Agreement or Preferred Stock Distribution Agreement, if any, or any other duly authorized, executed and delivered applicable purchase agreement, will be duly authorized, validly issued, fully paid and nonassessable, provided that the consideration therefor is not less than the par value thereof. -5- 7. With respect to any Debt Warrants and/or Additional Debt Warrants (collectively, the "Offered Debt Warrants"), when (i) if the Offered Debt Warrants are to be sold pursuant to a firm commitment underwritten offering, the Debt Underwriting Agreement with respect to the Offered Debt Warrants has been duly authorized, executed and delivered by the issuer of the Debt Securities and/or Additional Debt Securities to which the Offered Debt Warrants relate, the Company and the other parties thereto; (ii) if the Offered Debt Warrants are to be sold on an agency basis, the distribution agreement with respect to the Offered Debt Warrants (the "Debt Warrant Distribution Agreement") has been duly authorized, executed and delivered by the issuer of the Debt Securities and/or Additional Debt Securities to which the Offered Debt Warrants relate, the Company and the other parties thereto; (iii) the Board of Directors of the issuer of the Debt Securities and/or Additional Debt Securities to which the Offered Debt Warrants relate and the Company Board, including in each case any appropriate committee appointed thereby, and appropriate officers of the issuer of the Debt Securities and/or Additional Debt Securities to which the Offered Debt Warrants relate and the Company have taken all necessary corporate action to approve the issuance and terms of the Offered Debt Warrants and related matters; (iv) the terms of the Offered Debt Warrants and of their issuance and sale have been duly established in conformity with the Debt Warrant Agreement so as not to violate any applicable law, the Articles of Incorporation or the Bylaws of the issuer of the Debt Securities and/or Additional Debt Securities to which the Offered Debt Warrants relate or the Company or result in a default under or breach of any agreement or instrument binding upon the issuer of the Debt Securities and/or Additional Debt Securities to which the Offered Debt Warrants relate or the Company and so as to comply with any requirement or restriction imposed by any court or governmental body having jurisdiction over the issuer of the Debt Securities and/or Additional Debt Securities to which the Offered Debt Warrants relate or the Company; (v) the Debt Warrant Agreement has been duly authorized, executed and delivered by the issuer of the Debt Securities and/or Additional Debt Securities to which the Offered Debt Warrants relate and the Company to the Debt Warrant Agent; (vi) the Debt Warrant Agreement has been duly authorized, delivered and executed by the Debt Warrant Agent; and (vii) the Offered Debt Warrants have been duly executed and authenticated in accordance with the provisions of the Debt Warrant Agreement and duly delivered to the purchasers thereof upon payment of the agreed-upon consideration therefor, the Offered Debt Warrants, when issued and sold in accordance with the Debt Warrant Agreement and the related Debt Underwriting Agreement or Debt Warrant Distribution Agreement, if any, or any other duly authorized, executed and delivered applicable purchase agreement, will be valid and binding obligations of the issuer of the Debt Securities and/or Additional Debt Securities to which the Offered Debt Warrants relate and the Company, enforceable against the issuer of the Debt Securities and/or Additional Debt Securities to which the offered Debt Warrants relate and the Company in accordance with their respective terms, except to the extent that enforcement thereof may be limited by (a) bankruptcy, insolvency, reorganization, fraudulent transfer, moratorium or other similar laws now or hereafter in effect relating to or affecting creditors' rights generally, (b) general principles of equity (regardless of whether enforceability is considered in a proceeding at law or in equity) and (c) governmental authority to limit, delay or prohibit the making of payments outside the United States or in foreign currency or composite currency. We note that, as of the date hereof, a judgment for money in an action based on a Debt Warrant or an Additional Debt Warrant to purchase a Debt Security or an Additional Debt Security denominated in a foreign currency, currency unit or composite currency in a federal or state court in the United States ordinarily would be enforced in the United States only in United States dollars. The date used to determine the rate of conversion of the foreign currency, currency unit or composite currency in which a particular Debt Security or Additional Debt Security is denominated into United States dollars will depend upon various factors, including which court renders the judgment. -6- 8. With respect to any Common Stock Warrants and/or Additional Common Stock Warrants (collectively, the "Offered Common Stock Warrants"), when (i) if the Offered Common Stock Warrants are to be sold pursuant to a firm commitment underwritten offering, the Common Stock Underwriting Agreement with respect to the Offered Common Stock Warrants has been duly authorized, executed and delivered by the Company and the other parties thereto; (ii) if the Offered Common Stock Warrants are to be sold on an agency basis, the distribution agreement with respect to the Offered Common Stock Warrants (the "Common Stock Warrant Distribution Agreement") has been duly authorized, executed and delivered by the Company and the other parties thereto; (iii) the Company Board, including any appropriate committee appointed thereby, and appropriate officers of the Company have taken all necessary corporate action to approve the issuance and terms of the Offered Common Stock Warrants and related matters; (iv) the terms of the Offered Common Stock Warrants and of their issuance and sale have been duly established in conformity with the Common Stock Warrant Agreement so as not to violate any applicable law, the Company's Articles of Incorporation or Bylaws or result in a default under or breach of any agreement or instrument binding upon the Company and so as to comply with any requirement or restriction imposed by any court or governmental body having jurisdiction over the Company; (v) the Common Stock Warrant Agreement has been duly authorized, executed and delivered by the Company to the Common Stock Warrant Agent; (vi) the Common Stock Warrant Agreement has been duly authorized, executed and delivered by the Common Stock Warrant Agent; and (vii) the Offered Common Stock Warrants have been duly executed and authenticated in accordance with the provisions of the Common Stock Warrant Agreement and duly delivered to the purchasers thereof upon payment of the agreed-upon consideration therefor, the Offered Common Stock Warrants, when issued and sold in accordance with the Common Stock Warrant Agreement and the related Common Stock Underwriting Agreement or Common Stock Warrant Distribution Agreement, if any, or any other duly authorized, executed and delivered applicable purchase agreement, will be valid and binding obligations of the Company, enforceable against the Company in accordance with their respective terms, except to the extent that enforcement thereof may be limited by (a) bankruptcy, insolvency, reorganization, fraudulent transfer, moratorium or other similar laws now or hereafter in effect relating to or affecting creditors' rights generally and (b) general principles of equity (regardless of whether enforceability is considered in a proceeding at law or in equity), provided that the per share consideration payable upon the exercise of the Offered Common Stock Warrants is not less than the par value of the Common Stock. 9. With respect to any Preferred Stock Warrants and/or Additional Preferred Stock Warrants (collectively, the "Offered Preferred Stock Warrants"), when (i) if the Offered Preferred Stock Warrants are to be sold pursuant to a firm commitment underwritten offering, the Preferred Stock Underwriting Agreement with respect to the Offered Preferred Stock Warrants has been duly authorized, executed and delivered by the Company and the other parties thereto; (ii) if the Offered Preferred Stock Warrants are to be sold on an agency basis, the distribution agreement with respect to the Offered Preferred Stock Warrants (the "Preferred Stock Warrant Distribution Agreement") has been duly authorized, executed and delivered by the Company and the other parties thereto; (iii) the Company Board, including any appropriate committee appointed thereby, and appropriate officers of the Company have taken all necessary corporate action to approve the issuance and terms of the Offered Preferred Stock Warrants and related matters; (iv) the terms of the Offered Preferred Stock Warrants and of their issuance and sale have been duly established in conformity with the Preferred Stock Warrant Agreement so as not to violate any applicable law, the Company's Articles of Incorporation or Bylaws or result in a default under or breach of any agreement or instrument binding upon the Company and so as to comply with any requirement or restriction imposed by any court or governmental body having jurisdiction over the Company; (v) the Preferred Stock Warrant Agreement has been duly authorized, executed and delivered by the Company to the Preferred Stock Warrant Agent; (vi) the Preferred Stock Warrant Agreement has been duly authorized, executed and delivered by the Preferred Stock Warrant Agent; and (vii) the Offered Preferred Stock Warrants have been duly executed and authenticated in accordance with the provisions of the Preferred Stock Warrant Agreement and duly delivered to the purchasers thereof upon payment of the agreed-upon consideration therefor, the Offered Preferred Stock Warrants, when issued and sold in accordance with the Preferred Stock Warrant Agreement and the related Preferred Stock Underwriting Agreement or Preferred Stock Warrant Distribution Agreement, if any, or any other duly authorized, executed and delivered applicable purchase agreement, will be valid and binding obligations of the Company, enforceable against the Company in accordance with their respective terms, except to the extent that enforcement thereof may be limited by (a) bankruptcy, insolvency, reorganization, fraudulent transfer, moratorium or other similar laws now or hereafter in effect relating to or affecting creditors' rights generally and (b) general principles of equity (regardless of whether enforceability is considered in a proceeding at law or in equity), provided that the per share consideration payable upon the exercise of the Offered Preferred Stock Warrants is not less than the par value of the Preferred Stock. We hereby consent to the filing of this opinion with the Commission as an exhibit to the Registration Statement. We also consent to the reference to our firm under the heading "Legal Matters" in the Registration Statement. In giving this consent, we do not admit that we are in the category of persons whose consent is required under Section 7 of the Securities Act or the Rules and Regulations of the Commission. Very truly yours, -7- EX-12 7 b317330_ex12.txt EXHIBIT 12 Exhibit 12 Computation of Ratios of Earnings to Fixed Charges
Three months ended Twelve months ended October 31, January 31, ----------------------------------------------------------------- ------------------------- 1997 1998 1999 2000 2001 2001 2002 ------------ ------------ ------------ ------------ ---------- ----------- ---------- Earnings: Income before income taxes and extraordinary (loss) and change in accounting $107,646 $134,293 $162,750 $230,966 $337,889 $63,195 $69,984 Homebuilding Interest expense 29,746 36,052 40,378 46,777 59,002 11,764 14,978 Rent expense 193 293 425 639 852 151 237 Amortization 667 610 618 635 897 159 259 Collateralized mortgage financing: Interest expense 233 184 119 39 36 8 8 ------------ ------------ ------------ ------------ ----------- ----------- ---------- $138,485 $171,432 $204,290 $279,056 $398,676 $75,277 $85,466 ============ ============ ============ ============ =========== =========== ========== Fixed charges: Homebuilding: Interest incurred: $35,242 $38,331 $51,396 $60,236 $79,209 $16,893 $22,870 Rent expense 193 293 425 639 852 151 237 Amortization 667 610 618 635 897 159 259 Collateralized mortgage financing: Interest incurred: 233 184 119 39 36 8 8 ------------ ------------ ------------ ------------ ----------- ----------- ---------- $36,335 $39,418 $52,558 $61,549 $80,994 $17,211 $23,374 ============ ============ ============ ============ =========== =========== ========== Ratio, including collateralized mortgage financing 3.81 4.35 3.89 4.53 4.92 4.38 3.66
EX-23 8 ex23-2.txt EXHIBIT 23.2 EXHIBIT 23.2 CONSENT OF INDEPENDENT AUDITORS We consent to the reference to our firm under the caption "Experts" and to the incorporation by reference of our report dated December 11, 2001, with respect to the consolidated financial statements and schedule of Toll Brothers, Inc. included in the Annual Report (Form 10-K) of Toll Brothers, Inc. for the year ended October 31, 2001, in the Registration Statement (Form S-3 Nos. 333-00000, 333-00000-01, 333-00000-02 and 333-00000-03) and related Prospectus of Toll Brothers, Inc., Toll Corp., First Huntingdon Finance Corp., and Toll Finance Corp. for the registration of Debt Securities of Toll Corp., First Huntingdon Finance Corp., and Toll Finance Corp. and Common Stock, Preferred Stock, Warrants and Guarantees of Debt Securities of Toll Brothers, Inc. Ernst & Young LLP Philadelphia, Pennsylvania March 20, 2002 EX-25.1 9 b317330_ex25-1.txt EXHIBIT 25.1 EXHIBIT 25.1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM T-1 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(b)(2) _ BANK ONE TRUST COMPANY, NATIONAL ASSOCIATION (Exact name of trustee as specified in its charter) A National Banking Association 31-0838515 (I.R.S. employer identification number) 100 East Broad Street, Columbus, Ohio 43271-0181 (Address of principal executive offices) (Zip Code) Bank One Trust Company, National Association 1 Bank One Plaza Chicago, Illinois 60670 Attn: Sandra L. Caruba, First Vice President, (312) 336-9436 (Name, address and telephone number of agent for service) TOLL CORP. (Exact name of obligor as specified in its charter) Delaware 22-2485860 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification number) 3103 Philmont Avenue Huntingdon Valley, Pennsylvania 19006 (Address of principal executive offices) (Zip Code) Debt Securities (Title of Indenture Securities) Item 1. General Information. Furnish the following information as to the trustee: (a) Name and address of each examining or supervising authority to which it is subject. Comptroller of Currency, Washington, D.C.; Federal Deposit Insurance Corporation, Washington, D.C.; The Board of Governors of the Federal Reserve System, Washington D.C. (b) Whether it is authorized to exercise corporate trust powers. The trustee is authorized to exercise corporate trust powers. Item 2. Affiliations With the Obligor. If the obligor is an affiliate of the trustee, describe each such affiliation. No such affiliation exists with the trustee. Item 16. List of exhibits. List below all exhibits filed as a part of this Statement of Eligibility. 1. A copy of the articles of association of the trustee now in effect.* 2. A copy of the certificate of authority of the trustee to commence business.* 3. A copy of the authorization of the trustee to exercise corporate trust powers.* 4. A copy of the existing by-laws of the trustee.* 5. Not Applicable. 6. The consent of the trustee required by Section 321(b) of the Act. 7. A copy of the latest report of condition of the trustee published pursuant to law or the requirements of its supervising or examining authority. 8. Not Applicable. 9. Not Applicable. Pursuant to the requirements of the Trust Indenture Act of 1939, as amended, the trustee, Bank One Trust Company, National Association, a national banking association organized and existing under the laws of the United States of America, has duly caused this Statement of Eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of Chicago and State of Illinois, on the 19th day of March, 2002. Bank One Trust Company, National Association, Trustee By /s/Sandra L. Caruba Sandra L. Caruba First Vice President *Exhibits 1, 2, 3, and 4 are herein incorporated by reference to Exhibits bearing identical numbers in Item 16 of the Form T-1 of Bank One Trust Company, National Association, filed as Exhibit 25 to the Registration Statement on Form S-4 of U S WEST Communications, Inc., filed with the Securities and Exchange Commission on March 24, 2000 (Registration No. 333-32124). EXHIBIT 6 THE CONSENT OF THE TRUSTEE REQUIRED BY SECTION 321(b) OF THE ACT March 19, 2002 Securities and Exchange Commission Washington, D.C. 20549 Ladies and Gentlemen: In connection with the qualification of an indenture between Toll Corp. and Bank One Trust Company, National Association, as Trustee, the undersigned, in accordance with Section 321(b) of the Trust Indenture Act of 1939, as amended, hereby consents that the reports of examinations of the undersigned, made by Federal or State authorities authorized to make such examinations, may be furnished by such authorities to the Securities and Exchange Commission upon its request therefor. Very truly yours, Bank One Trust Company, National Association By: /s/Sandra L. Caruba Sandra L. Caruba First Vice President EXHIBIT 7 Legal Title of Bank: Bank One Trust Company, N.A. Call Date: 12/31/01 State #: 391581 FFIEC 041 Address: 100 Broad Street Vendor ID: D Cert #: 21377 Page RC-1 City, State Zip: Columbus, OH 43271 Transit #: 04400003
Consolidated Report of Condition for Insured Commercial and State-Chartered Savings Banks for December 31, 2001 All schedules are to be reported in thousands of dollars. Unless otherwise indicated, report the amount outstanding of the last business day of the quarter. Schedule RC--Balance Sheet
Dollar Amounts in thousands RCON BIL MIL THOU C300 ---- -------------- ---- ASSETS 1. Cash and balances due from depository institutions (from Schedule RC-A): RCON a. Noninterest-bearing balances and currency and coin(1) .................. 0081 285,199 1.a b. Interest-bearing balances(2)............................................ 0071 0 1.b 2. Securities a. Held-to-maturity securities (from Schedule RC-B, column A) ............. 1754 0 2.a b. Available-for-sale securities (from Schedule RC-B, column D)............ 1773 336 2.b 3. Federal funds sold and securities purchased under agreements to resell .................................................................... 1350 1,466,628 3. 4. Loans and lease financing receivables: (from Schedule RC-C): RCON a. Loans and leases held for sale.......................................... 5369 0 4.a b. Loans and leases, net of unearned income................................ B528 195,551 4.b c. LESS: Allowance for loan and lease losses............................... 3123 292 4.c d. Loans and leases, net of unearned income and allowance (item 4.b minus 4.c).................................................... B529 195,259 4.d 5. Trading assets (from Schedule RC-D)......... .............................. 3545 0 5. 6. Premises and fixed assets (including capitalized leases) .................. 2145 13,065 6. 7. Other real estate owned (from Schedule RC-M) .............................. 2150 0 7. 8. Investments in unconsolidated subsidiaries and associated companies (from Schedule RC-M)............................................. 2130 0 8. 9. Customers' liability to this bank on acceptances outstanding .............. 2155 0 9. 10. Intangible assets a. Goodwill............................................................... 3163 0 10.a b. Other intangible assets (from Schedule RC-M)........................... 0426 9,224 10.b 11. Other assets (from Schedule RC-F).......................................... 2160 250,027 11. 12. Total assets (sum of items 1 through 11)................................... 2170 2,219,738 12.
- ------------- (1) Includes cash items in process of collection and unposted debits. (2) Includes time certificates of deposit not held for trading. Legal Title of Bank: Bank One Trust Company, N.A. Call Date: 12/31/01 State #: 391581 FFIEC 041 Address: 100 East Broad Street Vendor ID: D Cert #" 21377 Page RC-2 City, State Zip: Columbus, OH 43271 Transit #: 04400003
Schedule RC-Continued
Dollar Amounts in Thousands --------- LIABILITIES 13. Deposits: a. In domestic offices (sum of totals of columns A and C RCON from Schedule RC-E) .................................................... 2200 1,957,028 13.a (1) Noninterest-bearing(1).............................................. 6631 1,378,041 13.a1 (2) Interest-bearing.................................................... 6636 587,987 13.a2 b. Not applicable 14. Federal funds purchased and securities sold under agreements to repurchase ............................................................. RCFD 2800 0 14. 15. Trading Liabilities (from Schedule RC-D)................................... RCFD 3548 0 15. 16. Other borrowed money (includes mortgage indebtedness and obligations under capitalized leases) (from Schedule RC-M)................. 3190 0 16. 17. Not applicable 18. Bank's liability on acceptances executed and outstanding .................. 2920 0 18. 19. Subordinated notes and debentures (2)...................................... 3200 0 19. 20. Other liabilities (from Schedule RC-G)..................................... 2930 72,264 20. 21. Total liabilities (sum of items 13 through 20)............................. 2948 2,029,292 21. 22. Minority interest in consolidated subsidiaries............................. 3000 0 22. EQUITY CAPITAL 23. Perpetual preferred stock and related surplus.............................. 3838 0 23. 24. Common stock............................................................... 3230 800 24. 25. Surplus (exclude all surplus related to preferred stock) .................. 3839 45,157 25. 26. a. Retained earnings....................................................... 3632 144,485 26.a b. Accumulated other comprehensive income (3).............................. B530 4 26.b 27. Other equity capital components (4)........................................ A130 0 27. 28. Total equity capital (sum of items 23 through 27) ......................... 3210 190,446 28. 29. Total liabilities, minority interest, and equity capital (sum of items 21, 22, and 28)...................................... 3300 2,219,738 29. Memorandum To be reported only with the March Report of Condition. 1. Indicate in the box at the right the number of the statement below that best describes the most comprehensive level of auditing work performed N/A Number for the bank by independent external auditors as of any date during 2000... RCFD 6724 M.1.
1 = Independent audit of the bank conducted in accordance with generally accepted auditing standards by a certified public accounting firm which submits a report on the bank 2 = Independent audit of the bank's parent holding company conducted in accordance with generally accepted auditing standards by a certified public accounting firm which submits a report on the consolidated holding company (but not on the bank separately) 3 = Directors' examination of the bank conducted in accordance with generally accepted auditing standards by a certified public accounting firm (may be required by state chartering authority) 4 = Directors' examination of the bank performed by other external auditors (may be required by state chartering authority) 5 = Review of the bank's financial statements by external auditors 6 = Compilation of the bank's financial statements by external auditors 7 = Other audit procedures (excluding tax preparation work) 8 = No external audit work - -------- (1) Includes total demand deposits and noninterest-bearing time and savings deposits. (2) Includes limited-life preferred stock and related surplus. (3) Includes net unrealized holding gains (losses) on available-for-sale securities, accumulated net gains (losses) on cash flow hedges, and minimum pension liability adjustments. (4) Includes treasury stock and unearned Employee Stock Ownership Plan shares. EX-25.2 10 b317330_ex25-2.txt EXHUBUT 25.2 EXHIBIT 25.2 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM T-1 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(b)(2) _ ------------------------ BANK ONE TRUST COMPANY, NATIONAL ASSOCIATION (Exact name of trustee as specified in its charter) A National Banking Association 31-0838515 (I.R.S. employer identification number) 100 East Broad Street, Columbus, Ohio 43271-0181 (Address of principal executive offices) (Zip Code) Bank One Trust Company, National Association 1 Bank One Plaza Chicago, Illinois 60670 Attn: Sandra L. Caruba, First Vice President, (312) 336-9436 (Name, address and telephone number of agent for service) ------------------------ FIRST HUNTINGDON FINANCE CORP. (Exact name of obligor as specified in its charter) Delaware 23-2485787 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification number) 3103 Philmont Avenue Huntingdon Valley, Pennsylvania 19006 (Address of principal executive offices) (Zip Code) Debt Securities (Title of Indenture Securities) Item 1. General Information. Furnish the following information as to the trustee: (a) Name and address of each examining or supervising authority to which it is subject. Comptroller of Currency, Washington, D.C.; Federal Deposit Insurance Corporation, Washington, D.C.; The Board of Governors of the Federal Reserve System, Washington D.C. (b) Whether it is authorized to exercise corporate trust powers. The trustee is authorized to exercise corporate trust powers. Item 2. Affiliations With the Obligor. If the obligor is an affiliate of the trustee, describe each such affiliation. No such affiliation exists with the trustee. Item 16. List of exhibits. List below all exhibits filed as a part of this Statement of Eligibility. 1. A copy of the articles of association of the trustee now in effect.* 2. A copy of the certificate of authority of the trustee to commence business.* 3. A copy of the authorization of the trustee to exercise corporate trust powers.* 4. A copy of the existing by-laws of the trustee.* 5. Not Applicable. 6. The consent of the trustee required by Section 321(b) of the Act. 7. A copy of the latest report of condition of the trustee published pursuant to law or the requirements of its supervising or examining authority. 8. Not Applicable. 9. Not Applicable. Pursuant to the requirements of the Trust Indenture Act of 1939, as amended, the trustee, Bank One Trust Company, National Association, a national banking association organized and existing under the laws of the United States of America, has duly caused this Statement of Eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of Chicago and State of Illinois, on the 19th day of March, 2002. Bank One Trust Company, National Association, Trustee By /s/Sandra L. Caruba Sandra L. Caruba First Vice President *Exhibits 1, 2, 3, and 4 are herein incorporated by reference to Exhibits bearing identical numbers in Item 16 of the Form T-1 of Bank One Trust Company, National Association, filed as Exhibit 25 to the Registration Statement on Form S-4 of U S WEST Communications, Inc., filed with the Securities and Exchange Commission on March 24, 2000 (Registration No. 333-32124). EXHIBIT 6 THE CONSENT OF THE TRUSTEE REQUIRED BY SECTION 321(b) OF THE ACT March 19, 2002 Securities and Exchange Commission Washington, D.C. 20549 Ladies and Gentlemen: In connection with the qualification of an indenture between Toll Corp. and Bank One Trust Company, National Association, as Trustee, the undersigned, in accordance with Section 321(b) of the Trust Indenture Act of 1939, as amended, hereby consents that the reports of examinations of the undersigned, made by Federal or State authorities authorized to make such examinations, may be furnished by such authorities to the Securities and Exchange Commission upon its request therefor. Very truly yours, Bank One Trust Company, National Association By: /s/Sandra L. Caruba Sandra L. Caruba First Vice President EXHIBIT 7 Legal Title of Bank: Bank One Trust Company, N.A. Call Date: 12/31/01 State #: 391581 FFIEC 041 Address: 100 Broad Street Vendor ID: D Cert #: 21377 Page RC-1 City, State Zip: Columbus, OH 43271 Transit #: 04400003
Consolidated Report of Condition for Insured Commercial and State-Chartered Savings Banks for December 31, 2001 All schedules are to be reported in thousands of dollars. Unless otherwise indicated, report the amount outstanding of the last business day of the quarter. Schedule RC--Balance Sheet
Dollar Amounts in thousands RCON BIL MIL THOU C300 ---- -------------- ---- ASSETS 1. Cash and balances due from depository institutions (from Schedule RC-A): RCON a. Noninterest-bearing balances and currency and coin(1) .................. 0081 285,199 1.a b. Interest-bearing balances(2)............................................ 0071 0 1.b 2. Securities a. Held-to-maturity securities (from Schedule RC-B, column A) ............. 1754 0 2.a b. Available-for-sale securities (from Schedule RC-B, column D)............ 1773 336 2.b 3. Federal funds sold and securities purchased under agreements to resell .................................................................... 1350 1,466,628 3. 4. Loans and lease financing receivables: (from Schedule RC-C): RCON a. Loans and leases held for sale.......................................... 5369 0 4.a b. Loans and leases, net of unearned income................................ B528 195,551 4.b c. LESS: Allowance for loan and lease losses............................... 3123 292 4.c d. Loans and leases, net of unearned income and allowance (item 4.b minus 4.c).................................................... B529 195,259 4.d 5. Trading assets (from Schedule RC-D)......... .............................. 3545 0 5. 6. Premises and fixed assets (including capitalized leases) .................. 2145 13,065 6. 7. Other real estate owned (from Schedule RC-M) .............................. 2150 0 7. 8. Investments in unconsolidated subsidiaries and associated companies (from Schedule RC-M)............................................. 2130 0 8. 9. Customers' liability to this bank on acceptances outstanding .............. 2155 0 9. 10. Intangible assets a. Goodwill............................................................... 3163 0 10.a b. Other intangible assets (from Schedule RC-M)........................... 0426 9,224 10.b 11. Other assets (from Schedule RC-F).......................................... 2160 250,027 11. 12. Total assets (sum of items 1 through 11)................................... 2170 2,219,738 12.
- ------------- (1) Includes cash items in process of collection and unposted debits. (2) Includes time certificates of deposit not held for trading. Legal Title of Bank: Bank One Trust Company, N.A. Call Date: 12/31/01 State #: 391581 FFIEC 041 Address: 100 East Broad Street Vendor ID: D Cert #" 21377 Page RC-2 City, State Zip: Columbus, OH 43271 Transit #: 04400003
Schedule RC-Continued
Dollar Amounts in Thousands --------- LIABILITIES 13. Deposits: a. In domestic offices (sum of totals of columns A and C RCON from Schedule RC-E) .................................................... 2200 1,957,028 13.a (1) Noninterest-bearing(1).............................................. 6631 1,378,041 13.a1 (2) Interest-bearing.................................................... 6636 587,987 13.a2 b. Not applicable 14. Federal funds purchased and securities sold under agreements to repurchase ............................................................. RCFD 2800 0 14. 15. Trading Liabilities (from Schedule RC-D)................................... RCFD 3548 0 15. 16. Other borrowed money (includes mortgage indebtedness and obligations under capitalized leases) (from Schedule RC-M)................. 3190 0 16. 17. Not applicable 18. Bank's liability on acceptances executed and outstanding .................. 2920 0 18. 19. Subordinated notes and debentures (2)...................................... 3200 0 19. 20. Other liabilities (from Schedule RC-G)..................................... 2930 72,264 20. 21. Total liabilities (sum of items 13 through 20)............................. 2948 2,029,292 21. 22. Minority interest in consolidated subsidiaries............................. 3000 0 22. EQUITY CAPITAL 23. Perpetual preferred stock and related surplus.............................. 3838 0 23. 24. Common stock............................................................... 3230 800 24. 25. Surplus (exclude all surplus related to preferred stock) .................. 3839 45,157 25. 26. a. Retained earnings....................................................... 3632 144,485 26.a b. Accumulated other comprehensive income (3).............................. B530 4 26.b 27. Other equity capital components (4)........................................ A130 0 27. 28. Total equity capital (sum of items 23 through 27) ......................... 3210 190,446 28. 29. Total liabilities, minority interest, and equity capital (sum of items 21, 22, and 28)...................................... 3300 2,219,738 29. Memorandum To be reported only with the March Report of Condition. 1. Indicate in the box at the right the number of the statement below that best describes the most comprehensive level of auditing work performed N/A Number for the bank by independent external auditors as of any date during 2000... RCFD 6724 M.1.
1 = Independent audit of the bank conducted in accordance with generally accepted auditing standards by a certified public accounting firm which submits a report on the bank 2 = Independent audit of the bank's parent holding company conducted in accordance with generally accepted auditing standards by a certified public accounting firm which submits a report on the consolidated holding company (but not on the bank separately) 3 = Directors' examination of the bank conducted in accordance with generally accepted auditing standards by a certified public accounting firm (may be required by state chartering authority) 4 = Directors' examination of the bank performed by other external auditors (may be required by state chartering authority) 5 = Review of the bank's financial statements by external auditors 6 = Compilation of the bank's financial statements by external auditors 7 = Other audit procedures (excluding tax preparation work) 8 = No external audit work - -------- (1) Includes total demand deposits and noninterest-bearing time and savings deposits. (2) Includes limited-life preferred stock and related surplus. (3) Includes net unrealized holding gains (losses) on available-for-sale securities, accumulated net gains (losses) on cash flow hedges, and minimum pension liability adjustments. (4) Includes treasury stock and unearned Employee Stock Ownership Plan shares. EX-25.3 11 b317330_ex25-3.txt EXHIBIT 25.3 EXHIBIT 25.3 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM T-1 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(b)(2) _ BANK ONE TRUST COMPANY, NATIONAL ASSOCIATION (Exact name of trustee as specified in its charter) A National Banking Association 31-0838515 (I.R.S. employer identification number) 100 East Broad Street, Columbus, Ohio 43271-0181 (Address of principal executive offices) (Zip Code) Bank One Trust Company, National Association 1 Bank One Plaza Chicago, Illinois 60670 Attn: Sandra L. Caruba, First Vice President, (312) 336-9436 (Name, address and telephone number of agent for service) TOLL FINANCE CORP. (Exact name of obligor as specified in its charter) Delaware 23-2978196 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification number) 3103 Philmont Avenue Huntingdon Valley, Pennsylvania 19006 (Address of principal executive offices) (Zip Code) Debt Securities (Title of Indenture Securities) Item 1. General Information. Furnish the following information as to the trustee: (a) Name and address of each examining or supervising authority to which it is subject. Comptroller of Currency, Washington, D.C.; Federal Deposit Insurance Corporation, Washington, D.C.; The Board of Governors of the Federal Reserve System, Washington D.C. (b) Whether it is authorized to exercise corporate trust powers. The trustee is authorized to exercise corporate trust powers. Item 2. Affiliations With the Obligor. If the obligor is an affiliate of the trustee, describe each such affiliation. No such affiliation exists with the trustee. Item 16. List of exhibits. List below all exhibits filed as a part of this Statement of Eligibility. 1. A copy of the articles of association of the trustee now in effect.* 2. A copy of the certificate of authority of the trustee to commence business.* 3. A copy of the authorization of the trustee to exercise corporate trust powers.* 4. A copy of the existing by-laws of the trustee.* 5. Not Applicable. 6. The consent of the trustee required by Section 321(b) of the Act. 7. A copy of the latest report of condition of the trustee published pursuant to law or the requirements of its supervising or examining authority. 8. Not Applicable. 9. Not Applicable. Pursuant to the requirements of the Trust Indenture Act of 1939, as amended, the trustee, Bank One Trust Company, National Association, a national banking association organized and existing under the laws of the United States of America, has duly caused this Statement of Eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of Chicago and State of Illinois, on the 19th day of March, 2002. Bank One Trust Company, National Association, Trustee By /s/Sandra L. Caruba Sandra L. Caruba First Vice President *Exhibits 1, 2, 3, and 4 are herein incorporated by reference to Exhibits bearing identical numbers in Item 16 of the Form T-1 of Bank One Trust Company, National Association, filed as Exhibit 25 to the Registration Statement on Form S-4 of U S WEST Communications, Inc., filed with the Securities and Exchange Commission on March 24, 2000 (Registration No. 333-32124). EXHIBIT 6 THE CONSENT OF THE TRUSTEE REQUIRED BY SECTION 321(b) OF THE ACT March 19, 2002 Securities and Exchange Commission Washington, D.C. 20549 Ladies and Gentlemen: In connection with the qualification of an indenture between Toll Corp. and Bank One Trust Company, National Association, as Trustee, the undersigned, in accordance with Section 321(b) of the Trust Indenture Act of 1939, as amended, hereby consents that the reports of examinations of the undersigned, made by Federal or State authorities authorized to make such examinations, may be furnished by such authorities to the Securities and Exchange Commission upon its request therefor. Very truly yours, Bank One Trust Company, National Association By: /s/Sandra L. Caruba Sandra L. Caruba First Vice President EXHIBIT 7 Legal Title of Bank: Bank One Trust Company, N.A. Call Date: 12/31/01 State #: 391581 FFIEC 041 Address: 100 Broad Street Vendor ID: D Cert #: 21377 Page RC-1 City, State Zip: Columbus, OH 43271 Transit #: 04400003
Consolidated Report of Condition for Insured Commercial and State-Chartered Savings Banks for December 31, 2001 All schedules are to be reported in thousands of dollars. Unless otherwise indicated, report the amount outstanding of the last business day of the quarter. Schedule RC--Balance Sheet
Dollar Amounts in thousands RCON BIL MIL THOU C300 ---- -------------- ---- ASSETS 1. Cash and balances due from depository institutions (from Schedule RC-A): RCON a. Noninterest-bearing balances and currency and coin(1) .................. 0081 285,199 1.a b. Interest-bearing balances(2)............................................ 0071 0 1.b 2. Securities a. Held-to-maturity securities (from Schedule RC-B, column A) ............. 1754 0 2.a b. Available-for-sale securities (from Schedule RC-B, column D)............ 1773 336 2.b 3. Federal funds sold and securities purchased under agreements to resell .................................................................... 1350 1,466,628 3. 4. Loans and lease financing receivables: (from Schedule RC-C): RCON a. Loans and leases held for sale.......................................... 5369 0 4.a b. Loans and leases, net of unearned income................................ B528 195,551 4.b c. LESS: Allowance for loan and lease losses............................... 3123 292 4.c d. Loans and leases, net of unearned income and allowance (item 4.b minus 4.c).................................................... B529 195,259 4.d 5. Trading assets (from Schedule RC-D)......... .............................. 3545 0 5. 6. Premises and fixed assets (including capitalized leases) .................. 2145 13,065 6. 7. Other real estate owned (from Schedule RC-M) .............................. 2150 0 7. 8. Investments in unconsolidated subsidiaries and associated companies (from Schedule RC-M)............................................. 2130 0 8. 9. Customers' liability to this bank on acceptances outstanding .............. 2155 0 9. 10. Intangible assets a. Goodwill............................................................... 3163 0 10.a b. Other intangible assets (from Schedule RC-M)........................... 0426 9,224 10.b 11. Other assets (from Schedule RC-F).......................................... 2160 250,027 11. 12. Total assets (sum of items 1 through 11)................................... 2170 2,219,738 12.
- ------------- (1) Includes cash items in process of collection and unposted debits. (2) Includes time certificates of deposit not held for trading. Legal Title of Bank: Bank One Trust Company, N.A. Call Date: 12/31/01 State #: 391581 FFIEC 041 Address: 100 East Broad Street Vendor ID: D Cert #" 21377 Page RC-2 City, State Zip: Columbus, OH 43271 Transit #: 04400003
Schedule RC-Continued
Dollar Amounts in Thousands --------- LIABILITIES 13. Deposits: a. In domestic offices (sum of totals of columns A and C RCON from Schedule RC-E) .................................................... 2200 1,957,028 13.a (1) Noninterest-bearing(1).............................................. 6631 1,378,041 13.a1 (2) Interest-bearing.................................................... 6636 587,987 13.a2 b. Not applicable 14. Federal funds purchased and securities sold under agreements to repurchase ............................................................. RCFD 2800 0 14. 15. Trading Liabilities (from Schedule RC-D)................................... RCFD 3548 0 15. 16. Other borrowed money (includes mortgage indebtedness and obligations under capitalized leases) (from Schedule RC-M)................. 3190 0 16. 17. Not applicable 18. Bank's liability on acceptances executed and outstanding .................. 2920 0 18. 19. Subordinated notes and debentures (2)...................................... 3200 0 19. 20. Other liabilities (from Schedule RC-G)..................................... 2930 72,264 20. 21. Total liabilities (sum of items 13 through 20)............................. 2948 2,029,292 21. 22. Minority interest in consolidated subsidiaries............................. 3000 0 22. EQUITY CAPITAL 23. Perpetual preferred stock and related surplus.............................. 3838 0 23. 24. Common stock............................................................... 3230 800 24. 25. Surplus (exclude all surplus related to preferred stock) .................. 3839 45,157 25. 26. a. Retained earnings....................................................... 3632 144,485 26.a b. Accumulated other comprehensive income (3).............................. B530 4 26.b 27. Other equity capital components (4)........................................ A130 0 27. 28. Total equity capital (sum of items 23 through 27) ......................... 3210 190,446 28. 29. Total liabilities, minority interest, and equity capital (sum of items 21, 22, and 28)...................................... 3300 2,219,738 29. Memorandum To be reported only with the March Report of Condition. 1. Indicate in the box at the right the number of the statement below that best describes the most comprehensive level of auditing work performed N/A Number for the bank by independent external auditors as of any date during 2000... RCFD 6724 M.1.
1 = Independent audit of the bank conducted in accordance with generally accepted auditing standards by a certified public accounting firm which submits a report on the bank 2 = Independent audit of the bank's parent holding company conducted in accordance with generally accepted auditing standards by a certified public accounting firm which submits a report on the consolidated holding company (but not on the bank separately) 3 = Directors' examination of the bank conducted in accordance with generally accepted auditing standards by a certified public accounting firm (may be required by state chartering authority) 4 = Directors' examination of the bank performed by other external auditors (may be required by state chartering authority) 5 = Review of the bank's financial statements by external auditors 6 = Compilation of the bank's financial statements by external auditors 7 = Other audit procedures (excluding tax preparation work) 8 = No external audit work - -------- (1) Includes total demand deposits and noninterest-bearing time and savings deposits. (2) Includes limited-life preferred stock and related surplus. (3) Includes net unrealized holding gains (losses) on available-for-sale securities, accumulated net gains (losses) on cash flow hedges, and minimum pension liability adjustments. (4) Includes treasury stock and unearned Employee Stock Ownership Plan shares. -----END PRIVACY-ENHANCED MESSAGE-----