Document:

exv4w1

Exhibit 4.1

TOLL BROTHERS, INC.

and

AMERICAN STOCK TRANSFER & TRUST COMPANY, LLC

as

Rights Agent

Section 382 Rights Agreement

Dated as of June 17, 2009

 

 

Table of Contents

	 	 	 	 	 
	Certain Definitions
	 	 	2	 
	Appointment of Rights Agent
	 	 	7	 
	Issue of Rights Certificates
	 	 	7	 
	Form of Rights Certificates
	 	 	8	 
	Countersignature and Registration
	 	 	10	 
	Transfer, Split Up, Combination and Exchange of Rights Certificates;
Mutilated, Destroyed, Lost or Stolen Rights Certificates
	 	 	10	 
	Exercise of Rights; Purchase Price; Expiration Date of Rights
	 	 	11	 
	Cancellation and Destruction of Rights Certificates
	 	 	13	 
	Reservation and Availability of Capital Stock
	 	 	13	 
	Preferred Stock Record Date
	 	 	15	 
	Adjustment of Purchase Price, Number and Kind of Shares or Number of Rights
	 	 	15	 
	Certificate of Adjusted Purchase Price or Number of Shares
	 	 	23	 
	Consolidation, Merger or Sale or Transfer of Assets, Cash Flow or Earning Power
	 	 	23	 
	Fractional Rights and Fractional Shares
	 	 	25	 
	Rights of Action
	 	 	26	 
	Agreement of Rights Holders
	 	 	27	 
	Rights Certificate Holder Not Deemed a Stockholder
	 	 	27	 
	Concerning the Rights Agent
	 	 	27	 
	Merger or Consolidation or Change of Name of Rights Agent
	 	 	28	 
	Duties of Rights Agent
	 	 	29	 
	Change of Rights Agent
	 	 	30	 
	Issuance of New Rights Certificates
	 	 	31	 
	Redemption and Termination
	 	 	31	 
	Notice of Certain Events
	 	 	32	 
	Notices
	 	 	33	 
	Supplements and Amendments
	 	 	34	 
	Exchange
	 	 	34	 
	Successors
	 	 	36	 
	Determinations and Actions by the Board of Directors, etc.
	 	 	36	 
	Benefits of this Agreement
	 	 	37	 
	Severability
	 	 	37	 
	Governing Law
	 	 	37	 
	Counterparts
	 	 	37	 
	Descriptive Headings
	 	 	37	 
	 
	 	 	 	 
	Exhibit A —  Form of Designations, Preferences and
Rights of Series B Junior Participating Preferred Stock
	 	 	 	 
	 
	 	 	 	 
	Exhibit B —  Form of Rights Certificate
	 	 	 	 
	 
	 	 	 	 
	Exhibit C —  Summary of Rights to Purchase Series B
Junior Participating Preferred Stock
	 	 	 	 

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SECTION 382 RIGHTS AGREEMENT

          SECTION 382 RIGHTS AGREEMENT, dated as of June 17, 2009 (the “Agreement”), between Toll
Brothers, Inc., a Delaware corporation (the “Company”), and American Stock Transfer & Trust
Company, LLC, a New York limited liability company (the “Rights Agent”).

 W
I T N E S S E T H :

          WHEREAS, the Company has generated NOLs (as defined in Section 1 hereof) for United States
federal income tax purposes, and such NOLs may potentially provide valuable tax benefits to the
Company, the Company desires to avoid an “ownership change” within the meaning of Section 382 of
the Internal Revenue Code of 1986, as amended (the “Code”) and the Treasury Regulations promulgated
thereunder, and thereby preserve the ability to utilize fully such NOLs and certain other tax
benefits and, in furtherance of such objective, the Company desires to enter into this Agreement;
and

          WHEREAS, on June 17, 2009 (the “Rights Dividend Declaration Date”), the Board of Directors of
the Company authorized and declared a dividend distribution of one preferred share purchase right
(a “Right”) for each share of common stock, par value $0.01 per share, of the Company (the “Common
Stock”) outstanding at the close of business on July 17, 2009 (the “Record Date”), and has
authorized the issuance of one Right (as such number may hereinafter be adjusted pursuant to the
provisions of Section 11(p) hereof) for each share of Common Stock issued between the Record Date
(whether originally issued or delivered from the Company’s treasury) and the earlier of the close
of business on the Distribution Date (as defined in Section 3 hereof) and the Expiration Date (as
defined in Section 7(a) hereof), each Right initially representing the right to purchase one one
ten-thousandth of a share (a “Unit”) of Series B Junior Participating Preferred Stock (the
“Preferred Stock”) of the Company having the rights, powers and preferences set forth in the form
of Designations, Preferences and Rights attached hereto as Exhibit A, upon the terms and subject to
the conditions hereinafter set forth.

          NOW, THEREFORE, in consideration of the premises and the mutual agreements herein set forth,
the parties hereby agree as follows:

Section 1. Certain Definitions. For purposes of this Agreement, the following terms have
the meanings indicated:

	 	(a)	 	“Acquiring Person” shall mean any Person who or which, together with all
Affiliates and Associates of such Person, shall be the Beneficial Owner of 4.95% or more of
the shares of Common Stock then outstanding, but shall not include (i) the Company, (ii)
any Subsidiary of the Company, (iii) any employee benefit plan of the Company, or of any
Subsidiary of the Company, or any Person or entity organized, appointed or established by
the Company for or pursuant to the terms of any such plan, or (iv) any Person holding
Common Stock for or pursuant to the terms of any such plan, or (v) any Exempted Person.
	 
	 	(b)	 	“Affiliate” and “Associate” shall have the respective meanings ascribed
to such terms in Rule 12b-2 of the General Rules and Regulations under the Securities
Exchange Act of 1934, as amended and in effect on the date of this Agreement (the “Exchange
Act”), and to

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	 	 	 	the extent not included within the foregoing, shall also include with respect to any Person,
any other Person whose shares of Common Stock would be deemed to be constructively owned by
such first Person, owned by a “single entity” as defined in Section 1,382-3(a)(1) of the
Treasury Regulations, or otherwise aggregated with shares owned by such first Person,
pursuant to the provisions of the Code, or any successor or replacement provision, and the
Treasury Regulations thereunder”.
	 
	 	(c)	 	A Person shall be deemed the “Beneficial Owner” of, and shall be deemed to
“beneficially own,” any securities:

(i) which such Person or any of such Person’s Affiliates or Associates, directly or
indirectly, has the right to acquire (whether such right is exercisable immediately or only
after the passage of time or the occurrence of an event) pursuant to any agreement,
arrangement or understanding (whether or not in writing) or upon the exercise of conversion
rights, exchange rights, other rights, warrants or options, or otherwise; provided, however,
that a Person shall not be deemed the “Beneficial Owner” of, or to “beneficially own,” (A)
securities tendered pursuant to a tender or exchange offer made by or on behalf of such
Person or any of such Person’s Affiliates or Associates until such tendered securities are
accepted for purchase or exchange, (B) securities issuable upon exercise of Rights at any
time prior to the occurrence of a Triggering Event, (C) securities issuable upon exercise of
Rights from and after the occurrence of a Triggering Event, which Rights were acquired by
such Person or any of such Person’s Affiliates or Associates prior to the Distribution Date
or pursuant to Section 3(a) or Section 22 hereof (the “Original Rights”) or pursuant to
Section 11(i) hereof in connection with an adjustment made with respect to any Original
Rights, or (D) securities issued or issuable pursuant to any employee benefit plan of the
Company or any Subsidiary of the Company or any employment agreement, arrangement or other
understanding between the Company or any Subsidiary of the Company and any Person or any of
such Person’s Affiliates or Associates; or

(ii) which such Person or any of such Person’s Affiliates or Associates, directly or
indirectly, has the right to vote or dispose of or has “beneficial ownership” of (as
determined pursuant to Rule 13d-3 of the General Rules and Regulations under the Exchange
Act), including pursuant to any agreement, arrangement or understanding, whether or not in
writing; provided, however, that a Person shall not be deemed the “Beneficial Owner” of, or
to “beneficially own,” any security under this subparagraph (ii) as a result of (A) an
agreement, arrangement or understanding to vote such security if such agreement, arrangement
or understanding: (1) arises solely from a revocable proxy or consent given in response to a
public proxy or consent solicitation made pursuant to, and in accordance with, the
applicable provisions of the General Rules and Regulations under the Exchange Act, and (2)
is not also then reportable by such Person on Schedule 13D under the Exchange Act (or any
comparable or successor report), or (B) securities issued or issuable pursuant to any
employee benefit plan of the Company or any Subsidiary of the Company or any employment
agreement, arrangement or other understanding between the Company or any Subsidiary of the
Company and any Person or any of such Person’s Affiliates or Associates;

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(iii) which are beneficially owned, directly or indirectly, by any other Person (or any
Affiliate or Associate thereof) with which such Person (or any of such Person’s Affiliates
or Associates) has any agreement, arrangement or understanding (whether or not in writing),
for the purpose of acquiring, holding, voting (except pursuant to a revocable proxy or
consent as described in the proviso to subparagraph (ii) of this paragraph (c) or disposing
of any voting securities of the Company; provided, however, that nothing in this paragraph
(c) shall cause a Person engaged in business as an underwriter of securities to be the
“Beneficial Owner” of, or to “beneficially own,” any securities acquired through such
Person’s participation in good faith in a firm commitment underwriting until the expiration
of forty (40) days after the date of such acquisition, and then only if such securities
continue to be owned by such Person at such expiration of forty (40) days; and provided,
further, however, that any stockholder of the Company, with Affiliates, Associates or other
Person(s) who may be deemed representatives of it serving as director(s) or officer(s) of
the Company, shall not be deemed to beneficially own securities held by other Persons as a
result of (x) Persons affiliated or otherwise associated with such stockholder
serving as director(s) or officer(s) or taking any action in connection therewith,
(y) discussing the status of its shares with the Company or other stockholders of
the Company similarly situated or (z) voting or acting in a manner similar to other
stockholder(s) similarly situated, absent a specific finding by the Board of Directors of an
express agreement among such stockholders to act in concert with one another as stockholders
so as to cause, in the good faith judgment of the Board of Directors, each such stockholder
to be the Beneficial Owner of the shares held by the other stockholder(s); or

(iv) Notwithstanding anything herein to the contrary, to the extent not within the foregoing
provisions of this Section 1(c), a Person shall be deemed the “Beneficial Owner” of and
shall be deemed to “beneficially own” or have “beneficial ownership” of, securities which
such Person would be deemed to constructively own or which otherwise would be aggregated
with shares owned by such Person pursuant to Section 382 of the Code, or any successor
provision or replacement provision and the Treasury Regulations thereunder.

	 	(d)	 	“Business Day” shall mean any day other than a Saturday, Sunday or a day on
which banking institutions in the State of New York are authorized or obligated by law or
executive order to close.
	 
	 	(e)	 	“close of business” on any given date shall mean 5:00 P.M., New York City time,
on such date; provided, however, that if such date is not a Business Day it shall mean 5:00
P.M., New York City time, on the next succeeding Business Day.
	 
	 	(f)	 	“Code” shall have the meaning set forth in the preamble to this Agreement.
	 
	 	(g)	 	“Common Stock” shall have the meaning set forth in the preamble to this
Agreement, except that “Common Stock” when used with reference to any Person other than the
Company shall mean the capital stock of such Person with the greatest voting power, or the
equity securities or other equity interest having power to control or direct the
management, of such Person (or, if such Person is a Subsidiary of another Person, the
Person or Persons that ultimately control such first mentioned Person).

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	 	(h)	 	“Common Stock Equivalents” shall have the meaning set forth in Section
11(a)(iii) hereof.
	 
	 	(i)	 	“Current Market Price” shall have the meaning set forth in Section 11(d)(i)
hereof.

	 	(j)	 	“Current Value” shall have the meaning set forth in Section 11(a)(iii) hereof.
	 
	 	(k)	 	“Distribution Date” shall have the meaning ser forth in Section 3(a) hereof.
	 
	 	(l)	 	“Equivalent Preferred Stock” shall have the meaning set forth in Section 11(b)
hereof.
	 
	 	(m)	 	“Exempted Person” shall mean any Person who, together with all Affiliates and
Associates of such Person, (i) is the Beneficial Owner of securities (as disclosed in
public filings with the Securities and Exchange Commission on the Rights Dividend
Declaration Date), representing 4.95% or more of the shares of Common Stock outstanding on
the Rights Dividend Declaration Date, provided, however, that any such Person described in
clause (i) shall no longer be deemed to be an Exempted Person and shall be deemed an
Acquiring Person if such Person, together with all Affiliates and Associates of such
Person, becomes the Beneficial Owner (and so long as such Person continues to be the
Beneficial Owner of 4.95% or more of the then outstanding shares of Common Stock), of
additional securities representing 1,000 or more shares of Common Stock, except (x)
pursuant to equity compensation awards granted to such Person by the Company or options or
warrants outstanding and beneficially owned by such Person as of the Rights Dividend
Declaration Date, or as a result of an adjustment to the number of shares of Common Stock
represented by such equity compensation award pursuant to the terms thereof or (y) as a
result of a stock split, stock dividend or the like; or (ii) becomes the Beneficial Owner
of securities representing 4.95% or more of the shares of Common Stock then outstanding
because of a reduction in the number of outstanding shares of Common Stock then outstanding
as a result of the purchase by the Company or a Subsidiary of the Company of shares of
Common Stock, provided, however, that any such Person described in clause (ii) shall no
longer be deemed to be an Exempted Person and shall be deemed an Acquiring Person if such
Person, together with all Affiliates and Associates of such Person, becomes the Beneficial
Owner, at any time after the date such Person became the Beneficial Owner of (and so long
as such Person continues to be the Beneficial Owner of) 4.95% or more of the then
outstanding shares of Common Stock, of additional securities representing 1,000 or more
shares of Common Stock, except (x) pursuant to the exercise of options or warrants to
purchase Common Stock outstanding and beneficially owned by such Person as of the date such
Person became the Beneficial Owner of 4.95% or more of the then outstanding shares of
Common Stock or as a result of an adjustment to the number of shares of Common Stock for
which such options or warrants are exercisable pursuant to the terms thereof, or (y) as a
result of a stock split, stock dividend or the like; or (iii) who is a Beneficial Owner of
4.95% or more of the shares of Common Stock outstanding and whose beneficial ownership
would not, as determined by the Board of Directors in its sole discretion, jeopardize or
endanger the availability to the Company of its NOLs; and provided further, however, that
if a Person is an Exempted Person solely by reason of clause (iii) above, then such Person
shall cease to be an Exempted Person if (A) such Person ceases to beneficially own 4.95% or
more of the

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	 	 	 	shares of the then outstanding Common Stock or (B) the Board of Directors of the Company, in
its sole discretion, makes a contrary determination with respect to the effect of such
Person’s beneficial ownership (together with all Affiliates and Associates of such Person)
with respect to the availability to the Company of its NOLs. A purchaser, assignee or
transferee of the shares of Common Stock (or warrants or options exercisable for Common
Stock) from an Exempted Person shall not thereby become an Exempted Person, except that a
transferee from the estate of an Exempted Person who receives Common Stock as a bequest or
inheritance from an Exempted Person shall be an Exempted Person so long as such Person
continues to be the Beneficial Owner of 4.95% or more of the then outstanding shares of
Common Stock.
	 
	 	(n)	 	“Expiration Date” shall have the meaning set forth in Section 7(a) hereof.
	 
	 	(o)	 	“Final Expiration Date” shall have the meaning set forth in Section 7(a)
hereof.
	 
	 	(p)	 	“NOLs” shall mean the Company’s net operating loss carryforwards.
	 
	 	(q)	 	“Person” shall mean any individual, firm, corporation, limited liability
company, partnership or other entity.
	 
	 	(r)	 	“Preferred Stock” shall mean shares of Series B Junior Participating Preferred
Stock, par value $0.01 per share, of the Company, and, to the extent that there are not a
sufficient number of shares of Series B Junior Participating Preferred Stock authorized to
permit the full exercise of the Rights, any other series of Preferred Stock, par value
$0.01 per share, of the Company designated for such purpose containing terms substantially
similar to the terms of the Series B Junior Participating Preferred Stock.
	 
	 	(s)	 	“Principal Party” shall have the meaning ser forth in Section 13(b) hereof.
	 
	 	(t)	 	“Purchase Price” shall have the meaning set forth in Section 4(a) hereof.
	 
	 	(u)	 	“Record Date” shall have the meaning set forth in the preamble of this
Agreement.
	 
	 	(v)	 	“Right” shall have the meaning set forth in the preamble of this Agreement.
	 
	 	(w)	 	“Rights Agent” shall have the meaning set forth in the preamble of this
Agreement.
	 
	 	(x)	 	“Rights Certificate” shall have the meaning set forth in Section 3(a) hereof.
	 
	 	(y)	 	“Rights Dividend Declaration Date” shall have the meaning set forth in the
preamble of this Agreement.
	 
	 	(z)	 	“Section 11(a)(ii) Event” shall mean any event described in Section 11(a)(ii)
hereof.
	 
	 	(aa)	 	“Section 13 Event” shall mean any event described in clauses (x), (y) or (z) of
Section 13(a) hereof.

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	 	(bb)	 	“Stock Acquisition Date” shall mean the first date of public announcement
(which, for purposes of this definition, shall include, without limitation, a report filed
pursuant to Section 13(d) under the Exchange Act) by the Company or an Acquiring Person
that an Acquiring Person has become such.
	 
	 	(cc)	 	“Subsidiary” shall mean, with reference to any Person, any Person of which a
majority of the voting power of voting equity securities or equity interests is
beneficially owned, directly or indirectly, by such Person or otherwise controlled by such
Person.
	 
	 	(dd)	 	“Substitution Period” shall have the meaning set forth in Section 11(a)(iii)
hereof.
	 
	 	(ee)	 	“Summary of Rights” shall have the meaning set forth in Section 3(b) hereof.
	 
	 	(ff)	 	“Trading Day” shall have the meaning set forth in Section 11(d)(i) hereof.
	 
	 	(gg)	 	“Tax Benefits” shall mean the net operating loss carryovers, capital loss
carryovers, general business credit carryovers, alternative minimum tax credit carryovers,
foreign tax credit carryovers, any loss or deduction attributable to a “net unrealized
built-in loss” within the meaning of Section 382 of the Code, and the Treasury Regulations
promulgated thereunder, of the Company or any of its Subsidiaries.
	 
	 	(hh)	 	“Treasury Regulations” shall mean final, temporary and proposed income tax
regulations promulgated under the Code, as amended.
	 
	 	(ii)	 	“Triggering Event” shall mean any Section 11(a)(ii) Event or any Section 13
Event.

Section 2. Appointment of Rights Agent. The Company hereby appoints the Rights Agent to
act as agent for the Company and the holders of the Rights (who, in accordance with Section 3
hereof, shall prior to the Distribution Date also be the holders of the Common Stock) in accordance
with the terms and conditions hereof, and the Rights Agent hereby accepts such appointment. The
Company may from time to time appoint such co-rights agents as it may deem necessary or desirable.

Section 3. Issue of Rights Certificates.

	 	(a)	 	Until the earlier of (i) the close of business on the tenth day after the Stock
Acquisition Date (or, if the tenth day after the Stock Acquisition Date occurs before the
Record Date, the close of business on the Record Date), or (ii) the close of business on
the tenth Business Day (or such later date as the Board of Directors of the Company shall
determine prior to such time as any Person becomes an Acquiring Person) after the date that
a tender or exchange offer by any Person (other than any Exempted Person, the Company, any
Subsidiary of the Company, any employee benefit plan of the Company or of any Subsidiary of
the Company, or any Person or entity organized, appointed or established by the Company for
or pursuant to the terms of any such plan) is first published or sent or given within the
meaning of Rule 14d-2(a) of the General Rules and Regulations under the

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	 	 	 	Exchange Act, if upon consummation thereof, such Person would become an Acquiring Person
(the earlier of (i) and (ii) being herein referred to as the “Distribution Date”), (x) the
Rights will be evidenced (subject to the provisions of paragraph (b) of this Section 3) by
the certificates for the Common Stock registered in the names of the holders of the Common
Stock (which certificates for Common Stock shall be deemed also to be certificates for
Rights) and not by separate certificates, and (y) the Rights will be transferable only in
connection with the transfer of the underlying shares of Common Stock (including a transfer
to the Company). As soon as practicable after the Distribution Date, the Company will
prepare and execute, the Rights Agent will countersign and the Rights Agent will send by
first-class, insured, postage prepaid mail, to each record holder of the Common Stock as of
the close of business on the Distribution Date, at the address of such holder shown on the
records of the Company, one or more rights certificates, in substantially the form of
Exhibit B hereto (the “Rights Certificates”), evidencing one Right for each share of Common
Stock so held, subject to adjustment as provided herein. In the event that an adjustment in
the number of Rights per share of Common Stock has been made pursuant to Section 11(p)
hereof, at the time of distribution of the Rights Certificates, the Company shall make the
necessary and appropriate rounding adjustments (in accordance with Section 14(a) hereof) so
that Rights Certificates representing only whole numbers of Rights are distributed and cash
is paid in lieu of any fractional Rights. As of and after the Distribution Date, the Rights
will be evidenced solely by such Rights Certificates.

	 	(b)	 	As promptly as practicable following the Record Date, the Company shall send a copy of
a Summary of Rights, in substantially the form attached hereto as Exhibit C (the “Summary
of Rights”), by first-class, postage prepaid mail, to each record holder of the Common
Stock as of the close of business on the Record Date, at the address of such holder shown
on the records of the Company. With respect to certificates for the Common Stock
outstanding as of the Record Date, or issued subsequent to the Record date, unless and
until the Distribution Date shall occur, the Rights will be evidenced by such certificates
for the Common Stock and the registered holders of the Common Stock shall also be the
registered holders of the associated Rights. Until the earliest of the Distribution Date,
the Expiration Date (as such term is defined in Section 7 hereof) or the redemption of the
Rights pursuant to Section 23 hereof, the transfer of any certificates representing shares
of Common Stock in respect of which Rights have been issued shall also constitute the
transfer of the Rights associated with such shares of Common Stock.
	 
	 	(c)	 	Rights shall be issued in respect of all shares of Common Stock which are issued
(whether originally issued or from the Company’s treasury) after the Record Date but prior
to the earliest of the Distribution Date, the Expiration Date or the redemption of the
Rights pursuant to Section 23 hereof. Certificates representing such shares of Common
Stock shall also be deemed to be certificates for Rights, and shall bear the following
legend: “This certificate also evidences and entitles the holder hereof to certain Rights
as set forth in the Rights Agreement between Toll Brothers, Inc. (the “Company”) and
American Stock Transfer & Trust Company, LLC (the “Rights Agent”), dated as of June 17,
2009 (the “Rights Agreement”), the terms of which are hereby incorporated herein by
reference and a copy of which is on file at the principal offices of the Rights Agent.
Under certain circumstances, as set forth in the Rights Agreement, such Rights will be
evidenced by

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	 	 	 	separate certificates and will no longer be evidenced by this certificate. The Rights Agent
will mail to the holder of this certificate a copy of the Rights Agreement, as in effect on
the date of mailing, without charge promptly after receipt of a written request therefor.
Under certain circumstances set forth in the Rights Agreement, Rights issued to, or held by,
any Person who is, was or becomes an Acquiring Person or any Affiliate or Associate thereof
(as such terms are defined in the Rights Agreement), whether currently held by or on behalf
of such Person or by any subsequent holder, may become null and void.” With respect to such
certificates containing the foregoing legend, until the earlier of the (i) Distribution Date
or (ii) the Expiration Date, the Rights associated with the Common Stock represented by such
certificates shall be evidenced by such certificates alone and registered holders of Common
Stock shall also be the registered holders of the associated Rights, and the transfer of any
of such certificates shall also constitute the transfer of the Rights associated with the
Common Stock represented by such certificates.

Section 4. Form of Rights Certificates.

	 	(a)	 	The Rights Certificates (and the forms of election to purchase and of assignment to be
printed on the reverse thereof) shall each be substantially in the form set forth in
Exhibit B hereto and may have such marks of identification or designation and such legends,
summaries or endorsements printed thereon as the Company may deem appropriate and as are
not inconsistent with the provisions of this Agreement, or as may be required to comply
with any applicable law or with any rule or regulation made pursuant thereto or with any
rule or regulation of any stock exchange on which the Rights may from time to time be
listed, or to conform to usage. Subject to the provisions of Section 11 and Section 22
hereof, the Rights Certificates, whenever distributed, shall be dated as of the Record Date
and on their face shall entitle the holders thereof to purchase such number of one
ten-thousandths of a share of Preferred Stock as shall be set forth therein at the price
set forth therein (such exercise price per one ten-thousandth of a share, the “Purchase
Price”), but the amount and type of securities purchasable upon the exercise of each Right
and the Purchase Price thereof shall be subject to adjustment as provided herein.

	 	(b)	 	Any Rights Certificate issued pursuant to Section 3(a), Section 11(i) or Section 22
hereof that represents Rights beneficially owned by: (i) an Acquiring Person or any
Associate or Affiliate of an Acquiring Person, (ii) a transferee of an Acquiring Person (or
of any such Associate or Affiliate) who becomes a transferee after the Acquiring Person
becomes such, or (iii) a transferee of an Acquiring Person (or of any such Associate or
Affiliate) who becomes a transferee prior to or concurrently with the Acquiring Person
becoming such and receives such Rights pursuant to either (A) a transfer (whether or not
for consideration) from the Acquiring Person to holders of equity interests in such
Acquiring Person or to any Person with whom such Acquiring Person has any continuing
agreement, arrangement or understanding regarding the transferred Rights or (B) a transfer
which the Board of Directors of the Company has determined is part of a plan, arrangement
or understanding which has as a primary purpose or effect avoidance of Section 7(e) hereof,
and any Rights Certificate issued pursuant to Section 6 or Section 11 hereof upon transfer,
exchange, replacement or adjustment of any other Rights Certificate referred to in this
sentence, shall contain (to the extent feasible) the following legend: “The Rights
represented by this Rights Certificate are or were beneficially owned by a Person who was
or became an Acquiring

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	 	 	 	Person or an Affiliate or Associate of an Acquiring Person (as such terms are defined in the
Rights Agreement). Accordingly, this Rights Certificate and the Rights represented hereby
may become null and void in the circumstances specified in Section 7(e) of such Agreement.”

Section 5. Countersignature and Registration.

	 	(a)	 	The Rights Certificates shall be executed on behalf of the Company by its Chairman of
the Board, its Vice Chairman, its Chief Executive Officer, its President or any Vice
President, either manually or by facsimile signature, and shall have affixed thereto the
Company’s seal or a facsimile thereof which shall be attested by the Secretary or an
Assistant Secretary of the Company, either manually or by facsimile signature. The Rights
Certificates shall be countersigned by the Rights Agent, either manually or by facsimile
signature, and shall not be valid for any purpose unless so countersigned. In case any
officer of the Company who shall have signed any of the Rights Certificates shall cease to
be such officer of the Company before countersignature by the Rights Agent and issuance and
delivery by the Company, such Rights Certificates, nevertheless, may be countersigned by
the Rights Agent and issued and delivered by the Company with the same force and effect as
though the person who signed such Rights Certificates had not ceased to be such officer of
the Company; and any Rights Certificates may be signed on behalf of the Company by any
person who, at the actual date of the execution of such Rights Certificate, shall be a
proper officer of the Company to sign such Rights Certificate, although at the date of the
execution of this Rights Agreement any such person was not such an officer.
	 
	 	(b)	 	Following the Distribution Date, the Rights Agent shall keep, or cause to be kept, at
its principal office or offices designated as the appropriate place for surrender of Rights
Certificates upon exercise or transfer, books for registration and transfer of the Rights
Certificates issued hereunder. Such books shall show the names and addresses of the
respective holders of the Rights Certificates, the number of Rights evidenced on its face
by each of the Rights Certificates and the date of each of the Rights Certificates.

Section 6. Transfer, Split Up, Combination and Exchange of Rights Certificates; Mutilated,
Destroyed, Lost or Stolen Rights Certificates.

	 	(a)	 	Subject to the provisions of Section 4(b), Section 7(e), Section 14 and Section 27
hereof, at any time after the close of business on the Distribution Date, and at or prior
to the close of business on the Expiration Date or the redemption of the rights pursuant to
Section 23 hereof, any Rights Certificate or Certificates may be transferred, split up,
combined or exchanged for another Rights Certificate or Certificates, entitling the
registered holder to purchase a like number of one ten-thousandths of a share of Preferred
Stock (or, following a Triggering Event, Common Stock, other securities, cash or other
assets, as the case may be) as the Rights Certificate or Certificates surrendered then
entitles such holder (or former holder in the case of a transfer) to purchase. Any
registered holder desiring to transfer, split up, combine or exchange any Rights
Certificate or Certificates shall make such request in writing delivered to the Rights
Agent, and shall surrender the Rights Certificate or Certificates to be transferred, split
up, combined or exchanged at the principal office or offices of the Rights Agent designated
for such purpose. Neither the Rights Agent nor the

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	 	 	 	Company shall be obligated to take any action whatsoever with respect to the transfer of any
such surrendered Rights Certificate until the registered holder shall have completed and
signed the certificate contained in the form of assignment on the reverse side of such
Rights Certificate and shall have provided such additional evidence of the identity of the
Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates thereof as the
Company shall reasonably request. Thereupon the Rights Agent shall, subject to Section
4(b), Section 7(e), Section 14 and Section 27 hereof, countersign and deliver to the Person
entitled thereto a Rights Certificate or Rights Certificates, as the case may be, as so
requested. The Company may require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any transfer, split up,
combination or exchange of Rights Certificates.

	 	(b)	 	Upon receipt by the Company and the Rights Agent of evidence reasonably satisfactory to
them of the loss, theft, destruction or mutilation of a Rights Certificate, and, in case of
loss, theft or destruction, of indemnity or security reasonably satisfactory to them, and
reimbursement to the Company and the Rights Agent of all reasonable expenses incidental
thereto, and upon surrender to the Rights Agent and cancellation of the Rights Certificate
if mutilated, the Company will execute and deliver a new Rights Certificate of like tenor
to the Rights Agent for countersignature and delivery to the registered owner in lieu of
the Rights Certificate so lost, stolen, destroyed or mutilated.

Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights.

	 	(a)	 	Subject to Section 7(e) and Section 27 hereof, the registered holder of any Rights
Certificate may exercise the Rights evidenced thereby (except as otherwise provided herein
including, without limitation, the restrictions on exercisability set forth in Section
9(c), Section 11(a)(iii) and Section 23(a) hereof) in whole or in part at any time after
the Distribution Date upon surrender of the Rights Certificate, with the form of election
to purchase and the certificate on the reverse side thereof duly executed, to the Rights
Agent at the principal office or offices of the Rights Agent designated for such purpose,
together with payment of the aggregate Purchase Price with respect to the total number of
one ten-thousandth of a share of Preferred Stock (or other securities, cash or other
assets, as the case may be) as to which such surrendered Rights are then exercisable, at or
prior to the earliest of (i) the close of business on July 16, 2019, (the “Final Expiration
Date”), (ii) the time at which the Rights are redeemed as provided in Section 23 hereof,
(iii) the time at which all of the Rights (other than Rights that have become void pursuant
to the provisions of Section 7(e) hereof) are exchanged for Common Stock or other assets or
securities as provided in Section 27 hereof, (iv) the close of business on the effective
date of the repeal of Section 382 or any successor statute if the Board of Directors of the
Company determines that this Agreement is no longer necessary or desirable for the
preservation of Tax Benefits, (v) the close of business on the first day of a taxable year
of the Company to which the Board of Directors of the Company determines that no Tax
Benefits may be carried forward, or (vi) the first anniversary of adoption of the Agreement
if shareholder approval of the Agreement has not been received by or on such date (the
earliest of (i) and (ii) and (iii) and (iv) and (v) and (vi) being herein referred to as
the “Expiration Date”).

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	 	(b)	 	The Purchase Price for each one ten-thousandth of a share of Preferred Stock pursuant
to the exercise of a Right shall initially be $100.00, and shall be subject to adjustment
from time to time as provided in Sections 11 and 13(a) hereof and shall be payable in
accordance with paragraph (c) below.

	 	(c)	 	Upon receipt of a Rights Certificate representing exercisable Rights, with the form of
election to purchase and the certificate duly executed, accompanied by payment, with
respect to each Right so exercised, of the Purchase Price per one ten-thousandth of a share
of Preferred Stock (or other shares, securities, cash or other assets, as the case may be)
to be purchased as set forth below and an amount equal to any applicable transfer tax, the
Rights Agent shall, subject to Section 20(k) hereof, thereupon promptly (i) (A)
requisition from any transfer agent of the shares of Preferred Stock (or make available, if
the Rights Agent is the transfer agent for such shares) certificates for the total number
of one ten-thousandths of a share of Preferred Stock to be purchased and the Company hereby
irrevocably authorizes its transfer agent to comply with all such requests, or (B) if the
Company shall have elected to deposit the total number of shares of Preferred Stock
issuable upon exercise of the Rights hereunder with a depositary agent, requisition from
the depositary agent depositary receipts representing such number of one ten-thousandths of
a share of Preferred Stock as are to be purchased (in which case certificates for the
 shares of Preferred Stock represented by such receipts shall be deposited by the transfer
agent with the depositary agent) and the Company shall direct the depositary agent to
comply with such request, (ii) requisition from the Company the amount of cash, if any, to
be paid in lieu of fractional shares in accordance with Section 14 hereof, (iii) after
receipt of such certificates or depositary receipts, cause the same to be delivered to, or
upon the order of the registered holder of such Rights Certificate, registered in such name
or names as may be designated by such holder, and (iv) after receipt thereof, deliver such
cash, if any, to or upon the order of the registered holder of such Rights Certificate.
The payment of the Purchase Price (as such amount may be reduced pursuant to Section
11(a)(iii) hereof) shall be made in cash or by certified bank check or bank draft payable
to the order of the Company. In the event that the Company is obligated to issue other
securities (including Common Stock) of the Company, pay cash and/or distribute other
property pursuant to Section 11(a) hereof, the Company will make all arrangements necessary
so that such other securities, cash and/or other property are available for distribution by
the Rights Agent, if and when appropriate. The Company reserves the right to require prior
to the occurrence of a Triggering Event that, upon any exercise of Rights, a number of
Rights be exercised so that only whole shares of Preferred Stock would be issued.
	 
	 	(d)	 	In case the registered holder of any Rights Certificate shall exercise less than all
the Rights evidenced thereby, a new Rights Certificate evidencing Rights equivalent to the
Rights remaining unexercised shall be issued by the Rights Agent and delivered to, or upon
the order of, the registered holder of such Rights Certificate, registered in such name or
names as may be designated by such holder, subject to the provisions of Section 14 hereof.
	 
	 	(e)	 	Notwithstanding anything in this Agreement to the contrary, from and after the first
occurrence of a Section 11(a)(ii) Event, any Rights beneficially owned by (i) an Acquiring
Person or an Associate or Affiliate of an Acquiring Person, (ii) a transferee of an
Acquiring

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	 	 	 	Person (or of any such Associate or Affiliate) who becomes a transferee after the Acquiring
Person becomes such, or (iii) a transferee of an Acquiring Person (or of any such Associate
or Affiliate) who becomes a transferee prior to or concurrently with the Acquiring Person
becoming such and receives such Rights pursuant to either (A) a transfer (whether or not for
consideration) from the Acquiring Person to holders of equity interests in such Acquiring
Person or to any Person with whom the Acquiring Person has any continuing agreement,
arrangement or understanding regarding the transferred Rights or (B) a transfer which the
Board of Directors of the Company has determined is part of a plan, arrangement or
understanding which has as a primary purpose or effect the avoidance of this Section 7(e),
shall become null and void without any further action and no holder of such Rights shall
have any rights whatsoever with respect to such Rights, whether under any provision of this
Agreement or otherwise. The Company shall use all reasonable efforts to insure that the
provisions of this Section 7(e) and Section 4(b) hereof are complied with, but shall have no
liability to any holder of Rights Certificates or other Person as a result of its failure to
make any determinations with respect to an Acquiring Person or any of its Affiliates,
Associates or transferees hereunder.
	 
	 	(f)	 	Notwithstanding anything in this Agreement to the contrary, neither the Rights Agent
nor the Company shall be obligated to undertake any action with respect to a registered
holder upon the occurrence of any purported exercise as set forth in this Section 7 unless
such registered holder shall have (i) completed and signed the certificate contained in the
form of election to purchase set forth on the reverse side of the Rights Certificate
surrendered for such exercise, and (ii) provided such additional evidence of the identity
of the Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates thereof as
the Company shall reasonably request.

Section 8. Cancellation and Destruction of Rights Certificates. All Rights Certificates
surrendered for the purpose of exercise, transfer, split up, combination or exchange shall, if
surrendered to the Company or any of its agents, be delivered to the Rights Agent for cancellation
or in canceled form, or, if surrendered to the Rights Agent, shall be canceled by it, and no Rights
Certificates shall be issued in lieu thereof except as expressly permitted by any of the provisions
of this Agreement. The Company shall deliver to the Rights Agent for cancellation and retirement,
and the Rights Agent shall so cancel and retire, any other Rights Certificate purchased or acquired
by the Company otherwise than upon the exercise thereof. The Rights Agent shall deliver all
canceled Rights Certificates to the Company, or shall, at the written request of the Company,
destroy such canceled Rights Certificates, and in such case shall deliver a certificate of
destruction thereof to the Company.

Section 9. Reservation and Availability of Capital Stock.

	 	(a)	 	The Company covenants and agrees that it will cause to be reserved and kept available
out of its authorized and unissued shares of Preferred Stock (and, following the occurrence
of a Triggering Event, out of its authorized and unissued shares of Common Stock and/or
other securities or out of its authorized and issued shares held in its treasury), the
number of shares of Preferred Stock (and, following the occurrence of a Triggering Event,
Common Stock and/or other securities) that, as provided in this Agreement, including
Section 11(a)(iii) hereof, will be sufficient to permit the exercise in full of all
outstanding Rights.

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	 	(b)	 	So long as the shares of Preferred Stock (and, following the occurrence of a Triggering
Event, Common Stock and/or other securities) issuable and deliverable upon the exercise of
the Rights may be listed on any national securities exchange, the Company shall use its
best efforts to cause, from and after such time as the Rights become exercisable, all
 shares reserved for such issuance to be listed on such exchange upon official notice of
issuance upon such exercise.
	 
	 	(c)	 	The Company shall use its best efforts to (i) file, as soon as practicable following
the earliest date after the first occurrence of a Section 11(a)(ii) Event on which the
consideration to be delivered by the Company upon exercise of the Rights has been
determined in accordance with Section 11(a)(iii) hereof, a registration statement under the
Securities Act of 1933 (the “Act”) with respect to the securities purchasable upon exercise
of the Rights on an appropriate form, (ii) cause such registration statement to become
effective as soon as practicable after such filing, and (iii) cause such registration
statement to remain effective (with a prospectus at all times meeting the requirements of
the Act) until the earlier of (A) the date as of which the Rights are no longer exercisable
for such securities, and (B) the date of the expiration of the Rights. The Company will
also take such action as may be appropriate under, or to ensure compliance with, the
securities or “blue sky” laws of the various states in connection with the exercisability
of the Rights. The Company may temporarily suspend, for a period of time not to exceed
ninety (90) days after the date set forth in clause (i) of the first sentence of this
Section 9(c), the exercisability of the Rights in order to prepare and file such
registration statement and permit it to become effective. Upon any such suspension, the
Company shall issue a public announcement stating that the exercisability of the Rights has
been temporarily suspended, as well as a public announcement at such time as the suspension
has been rescinded. In addition, if the Company shall determine that a registration
statement is required following the Distribution Date, the Company may temporarily suspend
the exercisability of the Rights until such time as a registration statement has been
declared effective. Notwithstanding any provision of this Agreement to the contrary, the
Rights shall not be exercisable in any jurisdiction if the requisite qualification in such
jurisdiction shall not have been obtained, the exercise thereof shall not be permitted
under applicable law or a registration statement shall not have been declared effective.
	 
	 	(d)	 	The Company covenants and agrees that it will take all such action as may be necessary
to ensure that all one ten-thousandths of a share of Preferred Stock (and, following the
occurrence of a Triggering Event, Common Stock and/or other securities) delivered upon
exercise of Rights shall, at the time of delivery of the certificates for such shares (or
Units) (subject to payment of the Purchase Price), be duly and validly authorized and
issued and fully paid and nonassessable.
	 
	 	(e)	 	The Company further covenants and agrees that it will pay when due and payable any and
all federal and state transfer taxes and charges which may be payable in respect of the
issuance or delivery of the Rights Certificates and of any certificates for a number of one
ten-thousandths of a share of Preferred Stock (or Common Stock and/or other securities, as
the case may be) upon the exercise of Rights. The Company shall not, however, be required
to pay any transfer tax which may be payable in respect of any transfer or delivery of
Rights

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	 	 	 	Certificates to a Person other than, or the issuance or delivery of a number of one
ten-thousandths of a share of Preferred Stock (or Common Stock and/or other securities, as
the case may be) in respect of a name other than that of, the registered holder of the
Rights Certificates evidencing Rights surrendered for exercise or to issue or deliver any
certificates for a number of one one-thousandths of a share of Preferred Stock (or Common
Stock and/or other securities, as the case may be) in a name other than that of the
registered holder upon the exercise of any Rights until such tax shall have been paid (any
such tax being payable by the holder of such Rights Certificate at the time of surrender) or
until it has been established to the Company’s satisfaction that no such tax is due.

Section 10. Preferred Stock Record Date. Each Person in whose name any certificate for a
number of one ten-thousandths of a share of Preferred Stock (or Common Stock and/or other
securities, as the case may be) is issued upon the exercise of Rights shall for all purposes be
deemed to have become the holder of record of such fractional shares of Preferred Stock (or Common
Stock and/or other securities, as the case may be) represented thereby on, and such certificate
shall be dated, the date upon which the Rights Certificate evidencing such Rights was duly
surrendered and payment of the Purchase Price (and all applicable transfer taxes) was made;
provided, however, that if the date of such surrender and payment is a date upon which the
Preferred Stock (or Common Stock and/or other securities, as the case may be) transfer books of the
Company are closed, such Person shall be deemed to have become the record holder of such shares
(fractional or otherwise) on, and such certificate shall be dated, the next succeeding Business Day
on which the Preferred Stock (or Common Stock and/or other securities, as the case may be) transfer
books of the Company are open. Prior to the exercise of the Rights evidenced thereby, the holder
of a Rights Certificate shall not be entitled to any rights of a stockholder of the Company with
respect to shares for which the Rights shall be exercisable, including, without limitation, the
right to vote, to receive dividends or other distributions or to exercise any preemptive rights,
and shall not be entitled to receive any notice of any proceedings of the Company, except as
provided herein.

Section 11. Adjustment of Purchase Price, Number and Kind of Shares or Number of Rights.
The Purchase Price, the number and kind of shares covered by each Right and the number of Rights
outstanding are subject to adjustment from time to time as provided in this Section 11.

	 	 	(a) (i)	 	In the event the Company shall at any time after the date of this Agreement
(A) declare a dividend on the Preferred Stock payable in shares of Preferred Stock, (B)
subdivide the outstanding Preferred Stock, (C) combine the outstanding Preferred Stock
into a smaller number of shares, or (D) issue any shares of its capital stock in a
reclassification of the Preferred Stock (including any such reclassification in
connection with a consolidation or merger in which the Company is the continuing or
surviving corporation), except as otherwise provided in this Section 11(a) and Section
7(e) hereof, the Purchase Price in effect at the time of the record date for such
dividend or of the effective date of such subdivision, combination or reclassification,
and the number and kind of shares of Preferred Stock or capital stock, as the case may
be, issuable on such date, shall be proportionately adjusted so that the holder of any
Right exercised after such time shall be entitled to receive, upon payment of the
Purchase Price then in effect, the aggregate number and kind of shares of Preferred Stock
or capital stock, as the case may be, which, if such Right had been exercised immediately
prior to such date and at a time when the Preferred Stock transfer books of the Company
were open, such holder

- 15 -

 

	 	 	 	 	would have owned upon such exercise and been entitled to receive by virtue of such
dividend, subdivision, combination or reclassification; provided, however, that in no
event shall the consideration to be paid upon the exercise of one Right be less than the
aggregate par value of the shares of Preferred Stock or capital stock, as the case may
be, issuable upon exercise of one Right. If an event occurs which would require an
adjustment under both this Section 11(a)(i) and Section 11(a)(ii) hereof, the adjustment
provided for in this Section 11(a)(i) shall be in addition to, and shall be made prior
to, any adjustment required pursuant to Section 11(a)(ii) hereof.

	 	(ii)	 	In the event any Person shall become an Acquiring Person, then, promptly
following the occurrence of such event, proper provision shall be made so that each
holder of a Right (except as provided below and in Section 7(e) hereof) shall
thereafter have the right to receive, upon exercise thereof at the then current
Purchase Price in accordance with the terms of this Agreement, in lieu of a number of
one ten-thousandths of a share of Preferred Stock, such number of shares of Common
Stock of the Company as shall equal the result obtained by (x) multiplying the then
current Purchase Price by the then number of one ten-thousandths of a share of
Preferred Stock for which a Right was exercisable immediately prior to the first
occurrence of a Section 11(a)(ii) Event, and (y) dividing that product (which,
following such first occurrence, shall thereafter be referred to as the “Purchase
Price” for each Right and for all purposes of this Agreement) by 50% of the Current
Market Price (determined pursuant to Section 11(d) hereof) per share of Common Stock on
the date of such first occurrence (such number of shares, the “Adjustment Shares”).

	 	(iii)	 	In the event that the number of shares of Common Stock which are authorized by
the Company’s Certificate of Incorporation but not outstanding, subscribed for or
reserved for issuance for purposes other than upon exercise of the Rights are not
sufficient to permit the exercise in full of the Rights in accordance with the
foregoing subparagraph (ii) of this Section 11(a), the Company shall (A) determine the
value of the Adjustment Shares issuable upon the exercise of a Right (the “Current
Value”), and (B) with respect to each Right (subject to Section 7(e) hereof), make
adequate provision to substitute for the Adjustment Shares, upon the exercise of a
Right and payment of the applicable Purchase Price, (1) cash, (2) a reduction in the
Purchase Price, (3) Common Stock or other equity securities of the Company (including,
without limitation, shares, or units of shares, of preferred stock, such as the
Preferred Stock, which the Board of Directors of the Company has deemed to have
essentially the same value or economic rights as shares of Common Stock (such shares of
preferred stock being referred to as “Common Stock Equivalents”)), (4) debt securities
of the Company, (5) other assets, or (6) any combination of the foregoing, having an
aggregate value equal to the Current Value (less the amount of any reduction in the
Purchase Price), where such aggregate value has been determined by the Board based upon
the advice of a nationally recognized investment banking firm selected by the Board;
provided, however, that if the Company shall not have made adequate provision to
deliver value pursuant to clause (B) above within thirty (30) days following the later
of (x) the first occurrence of a Section 11(a)(ii) Event and (y) the date on which the
Company’s right of redemption pursuant to Section 23(a) expires (the later of (x) and
(y) being referred to herein as the “Section

- 16 -

 

	 	 	 	11(a)(ii) Trigger Date”), then the Company shall be obligated to deliver, upon the
surrender for exercise of a Right and without requiring payment of the Purchase Price,
 shares of Common Stock (to the extent available) and then, if necessary, cash, which
 shares and/or cash have an aggregate value equal to the Spread. For purposes of the
preceding sentence, the term “Spread” shall mean the excess of (i) the Current Value
over (ii) the Purchase Price. If the Board of Directors of the Company determines in
good faith that it is likely that sufficient additional shares of Common Stock could be
authorized for issuance upon exercise in full of the Rights, the thirty (30) day period
set forth above may be extended to the extent necessary, but not more than ninety (90)
days after the Section 11(a)(ii) Trigger Date, in order that the Company may seek
stockholder approval for the authorization of such additional shares (such thirty (30)
day period, as it may be extended, is herein called the “Substitution Period”). To the
extent that the Company determines that action should to be taken pursuant to the first
and/or third sentences of this Section 11(a)(iii), the Company (1) shall provide,
subject to Section 7(e) hereof, that such action shall apply uniformly to all
outstanding Rights, and (2) may suspend the exercisability of the Rights until the
expiration of the Substitution Period in order to seek such stockholder approval for
such authorization of additional shares and/or to decide the appropriate form of
distribution to be made pursuant to such first sentence and to determine the value
thereof. In the event of any such suspension, the Company shall issue a public
announcement stating that the exercisability of the Rights has been temporarily
suspended, as well as a public announcement at such time as the suspension is no longer
in effect. For purposes of this Section 11(a)(iii), the value of each Adjustment Share
shall be the Current Market Price per share of the Common Stock on the Section 11(a)(ii)
Trigger Date and the per share or per unit value of any Common Stock Equivalent shall be
deemed to equal the Current Market Price per share of the Common Stock on such date.

	 	(b)	 	In case the Company shall fix a record date for the issuance of rights, options or
warrants to all holders of Preferred Stock entitling them to subscribe for or purchase (for
a period expiring within forty-five (45) calendar days after such record date) Preferred
Stock (or shares having the same rights, privileges and preferences as the shares of
Preferred Stock (“Equivalent Preferred Stock”)) or securities convertible into Preferred
Stock or Equivalent Preferred Stock at a price per share of Preferred Stock or per share of
Equivalent Preferred Stock (or having a conversion price per share, if a security
convertible into Preferred Stock or Equivalent Preferred Stock) less than the Current
Market Price (as determined pursuant to Section 11(d) hereof) per share of Preferred Stock
on such record date, the Purchase Price to be in effect after such record date shall be
determined by multiplying the Purchase Price in effect immediately prior to such record
date by a fraction, the numerator of which shall be the number of shares of Preferred Stock
outstanding on such record date, plus the number of shares of Preferred Stock which the
aggregate offering price of the total number of shares of Preferred Stock and/or Equivalent
Preferred Stock so to be offered (and/or the aggregate initial conversion price of the
convertible securities so to be offered) would purchase at such Current Market Price, and
the denominator of which shall be the number of shares of Preferred Stock outstanding on
such record date, plus the number of additional shares of Preferred Stock and/or Equivalent
Preferred Stock to be offered for subscription or purchase (or into which the convertible
securities so to be offered are initially convertible);

- 17 -

 

	 	 	 	provided, however, that in no event shall the consideration to be paid upon the exercise of
one Right be less than the aggregate par value of the shares of Preferred Stock or capital
stock, as the case may be, issuable upon exercise of one Right. In case such subscription
price may be paid by delivery of consideration part or all of which may be in a form other
than cash, the value of such consideration shall be as determined in good faith by the Board
of Directors of the Company, whose determination shall be described in a statement filed
with the Rights Agent and shall be binding on the Rights Agent and the holders of the
Rights. Shares of Preferred Stock owned by or held for the account of the Company shall not
be deemed outstanding for the purpose of any such computation. Such adjustment shall be
made successively whenever such a record date is fixed, and in the event that such rights or
warrants are not so issued, the Purchase Price shall be adjusted to be the Purchase Price
which would then be in effect if such record date had not been fixed.

	 	(c)	 	In case the Company shall fix a record date for a distribution to all holders of
Preferred Stock (including any such distribution made in connection with a consolidation or
merger in which the Company is the continuing corporation) cash (other than a regular
quarterly cash dividend out of the earnings or retained earnings of the Company), assets
(other than a dividend payable in Preferred Stock, but including any dividend payable in
stock other than Preferred Stock) or evidences of indebtedness, or of subscription rights
or warrants (excluding those referred to in Section 11(b) hereof), the Purchase Price to be
in effect after such record date shall be determined by multiplying the Purchase Price in
effect immediately prior to such record date by a fraction, the numerator of which shall be
the Current Market Price (as determined pursuant to Section 11(d) hereof) per share of
Preferred Stock on such record date, less the fair market value (as determined in good
faith by the Board of Directors of the Company, whose determination shall be described in a
statement filed with the Rights Agent) of the portion of the cash, assets or evidences of
indebtedness so to be distributed or of such subscription rights or warrants applicable to
a share of Preferred Stock and the denominator of which shall be such Current Market Price
(as determined pursuant to Section 11(d) hereof) per share of Preferred Stock; provided,
however, that in no event shall the consideration to be paid upon the exercise of one Right
be less than the aggregate par value of the shares of Preferred Stock or capital stock, as
the case may be, issuable upon exercise of one Right. Such adjustments shall be made
successively whenever such a record date is fixed, and in the event that such distribution
is not so made, the Purchase Price shall be adjusted to be the Purchase Price which would
have been in effect if such record date had not been fixed.

	 	(d) 	(i)	 	For the purpose of any computation hereunder, other than computations made
pursuant to Section 11(a)(iii) hereof, the Current Market Price per share of Common Stock
on any date shall be deemed to be the average of the daily closing prices per share of such
Common Stock for the thirty (30)consecutive Trading Days immediately prior to such date,
and for purposes of computations made pursuant to Section 11(a)(iii) hereof, the Current
Market Price per share of Common Stock on any date shall be deemed to be the average of the
daily closing prices per share of such Common Stock for the ten (10) consecutive Trading
Days immediately following such date; provided, however, that in the event that the Current
Market Price per share of the Common Stock is determined during a period following the
announcement by the issuer of such Common Stock of (A)

- 18 -

 

	 	 	 	a dividend or distribution on such Common Stock payable in shares of such Common Stock
or securities convertible into shares of such Common Stock (other than the Rights), or
(B) any subdivision, combination or reclassification of such Common Stock, and the
ex-dividend date for such dividend or distribution, or the record date for such
subdivision, combination or reclassification shall not have occurred prior to the
commencement of the requisite thirty (30) Trading Day or ten (10) Trading Day period, as
set forth above, then, and in each such case, the Current Market Price shall be properly
adjusted to take into account ex-dividend trading. The closing price for each day shall
be the last sale price, regular way, or, in case no such sale takes place on such day,
the average of the closing bid and asked prices, regular way, in either case as reported
in the principal consolidated transaction reporting system with respect to securities
listed or admitted to trading on the New York Stock Exchange or, if the shares of Common
Stock are not listed or admitted to trading on the New York Stock Exchange, as reported
in the principal consolidated transaction reporting system with respect to securities
listed on the principal national securities exchange on which the shares of Common Stock
are listed or admitted to trading or, if the shares of Common Stock are not listed or
admitted to trading on any national securities exchange, the last quoted price or, if
not so quoted, the average of the high bid and low asked prices in the over-the-counter
market, as reported by the National Association of Securities Dealers Automated
Quotation System (“NASDAQ”) or such other system then in use, or, if on any such date
the shares of Common Stock are not quoted by any such organization, the average of the
closing bid and asked prices as furnished by a professional market maker making a market
in the Common Stock selected by the Board of Directors of the Company. If on any such
date no market maker is making a market in the Common Stock, the fair value of such
 shares on such date as determined in good faith by the Board shall be used. The term
“Trading Day” shall mean a day on which the principal national securities exchange on
which the shares of Common Stock are listed or admitted to trading is open for the
transaction of business or, if the shares of Common Stock are not listed or admitted to
trading on any national securities exchange, a Business Day. If the Common Stock is not
publicly held or not so listed or traded, Current Market Price per share shall mean the
fair value per share as determined in good faith by the Board, whose determination shall
be described in a statement filed with the Rights Agent and shall be conclusive for all
purposes.
	 
	 	(ii)	 	For the purpose of any computation hereunder, the Current Market Price per
share of Preferred Stock shall be determined in the same manner as set forth above for
the Common Stock in clause (i) of this Section 11(d) (other than the last sentence
thereof). If the Current Market Price per share of Preferred Stock cannot be
determined in the manner provided above or if the Preferred Stock is not publicly held
or listed or traded in a manner described in clause (i) of this Section 11(d), the
Current Market Price per share of Preferred Stock shall be conclusively deemed to be an
amount equal to 10,000 (as such number may be appropriately adjusted for such events as
stock splits, stock dividends and recapitalizations with respect to the Common Stock
occurring after the date of this Agreement) multiplied by the Current Market Price per
share of the Common Stock. If neither the Common Stock nor the Preferred Stock is
publicly held or so listed or traded, Current Market Price per share of the Preferred
Stock shall mean

- 19 -

 

	 	 	 	the fair value per share as determined in good faith by the Board of Directors of the
Company, whose determination shall be described in a statement filed with the Rights
Agent and shall be conclusive for all purposes. For all purposes of this Agreement, the
Current Market Price of a Unit shall be equal to the Current Market Price of one share
of Preferred Stock divided by 10,000.

	 	(e)	 	Anything herein to the contrary notwithstanding, no adjustment in the Purchase Price
shall be required unless such adjustment would require an increase or decrease of at least
1% in the Purchase Price; provided, however, that any adjustments which by reason of this
Section 11(e) are not required to be made shall be carried forward and taken into account
in any subsequent adjustment. All calculations under this Section 11 shall be made to the
nearest cent or to the nearest ten-thousandth of a share of Common Stock or other share of
capital stock or one-ten millionth of a share of Preferred Stock, as the case may be.
Notwithstanding the first sentence of this Section 11(e), any adjustment required by this
Section 11 shall be made no later than the earlier of (i) three (3) years from the date of
the transaction which mandates such adjustment, or (ii) the Expiration Date.
	 
	 	(f)	 	If as a result of an adjustment made pursuant to Section 11(a)(ii) or Section 13(a)
hereof, the holder of any Right thereafter exercised shall become entitled to receive any
 shares of capital stock other than Preferred Stock, thereafter the number of such other
 shares so receivable upon exercise of any Right and the Purchase Price thereof 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 the Preferred Stock contained in Sections
11(a), (b), (c), (e), (g), (h), (i), (j), (k) and (m), and the provisions of Sections 7, 9,
10, 13 and 14 hereof with respect to the Preferred Stock shall apply on like terms to any
such other shares.
	 
	 	(g)	 	All Rights originally issued by the Company subsequent to any adjustment made to the
Purchase Price hereunder shall evidence the right to purchase, at the adjusted Purchase
Price, the number of one ten-thousandths of a share of Preferred Stock purchasable from
time to time hereunder upon exercise of the Rights, all subject to further adjustment as
provided herein.
	 
	 	(h)	 	Unless the Company shall have exercised its election as provided in Section 11(i), upon
each adjustment of the Purchase Price as a result of the calculations made in Sections
11(b) and (c), each Right outstanding immediately prior to the making of such adjustment
shall thereafter evidence the right to purchase, at the adjusted Purchase Price, that
number of one ten-thousandths of a share of Preferred Stock (calculated to the nearest
one-ten millionth of a share of Preferred Stock) obtained by:

	 	(i)	 	multiplying (x) the number of one ten-thousandths of a share covered by a Right
immediately prior to this adjustment, by (y) the Purchase Price in effect immediately
prior to such adjustment of the Purchase Price, and (ii) dividing the product so
obtained by the Purchase Price in effect immediately after such adjustment of the
Purchase Price.
	 
	 	(i)	 	The Company may elect on or after the date of any adjustment of the Purchase
Price to adjust the number of Rights, in lieu of any adjustment in the number of one
ten-

- 20 -

 

	 	 	 	thousandths of a share of Preferred Stock purchasable upon the exercise of a Right.
Each of the Rights outstanding after the adjustment in the number of Rights shall be
exercisable for the number of one ten-thousandths of a share of Preferred Stock for
which a Right was exercisable immediately prior to such adjustment. Each Right held of
record prior to such adjustment of the number of Rights shall become that number of
Rights (calculated to the nearest one ten-thousandth) obtained by dividing the Purchase
Price in effect immediately prior to adjustment of the Purchase Price by the Purchase
Price in effect immediately after adjustment of the Purchase Price. The Company shall
make a public announcement of its election to adjust the number of Rights, indicating
the record date for the adjustment, and, if known at the time, the amount of the
adjustment to be made. This record date may be the date on which the Purchase Price is
adjusted or any day thereafter, but, if the Rights Certificates have been issued, shall
be at least ten (10) days later than the date of the public announcement. If Rights
Certificates have been issued, upon each adjustment of the number of Rights pursuant to
this Section 11(i), the Company shall, as promptly as practicable, cause to be
distributed to holders of record of Rights Certificates on such record date Rights
Certificates evidencing, subject to Section 14 hereof, the additional Rights to which
such holders shall be entitled as a result of such adjustment, or, at the option of the
Company, shall cause to be distributed to such holders of record in substitution and
replacement for the Rights Certificates held by such holders prior to the date of
adjustment, and upon surrender thereof, if required by the Company, new Rights
Certificates evidencing all the Rights to which such holders shall be entitled after
such adjustment. Rights Certificates so to be distributed shall be issued, executed and
countersigned in the manner provided for herein (and may bear, at the option of the
Company, the adjusted Purchase Price) and shall be registered in the names of the
holders of record of Rights Certificates on the record date specified in the public
announcement.

	 	(j)	 	Irrespective of any adjustment or change in the Purchase Price or the number of one
ten-thousandths of a share of Preferred Stock issuable upon the exercise of the Rights, the
Rights Certificates theretofore and thereafter issued may continue to express the Purchase
Price per one ten-thousandth of a share and the number of one ten-thousandths of a share
which were expressed in the initial Rights Certificates issued hereunder.
	 
	 	(k)	 	Before taking any action that would cause an adjustment reducing the Purchase Price
below the then par value, if any, of the number of one ten-thousandths of a share of
Preferred Stock issuable upon exercise of the Rights, the Company shall take any corporate
action which may, in the opinion of its counsel, be necessary in order that the Company may
validly and legally issue fully paid and nonassessable such number of one ten-thousandths
of a share of Preferred Stock at such adjusted Purchase Price.
	 
	 	(l)	 	In any case in which this Section 11 shall require that an adjustment in the Purchase
Price be made effective as of a record date for a specified event, the Company may elect to
defer until the occurrence of such event the issuance to the holder of any Right exercised
after such record date the number of one ten-thousandths of a share of Preferred Stock and
other capital stock or securities of the Company, if any, issuable upon such exercise over
and above the number of one ten-thousandths of a share of Preferred Stock and other capital

- 21 -

 

	 	 	 	stock or securities of the Company, if any, issuable upon such exercise on the basis of the
Purchase Price in effect prior to such adjustment; provided, however, that the Company shall
deliver to such holder a due bill or other appropriate instrument evidencing such holder’s
right to receive such additional shares (fractional or otherwise) or securities upon the
occurrence of the event requiring such adjustment.
	 
	 	(m)	 	Anything in this Section 11 to the contrary notwithstanding, the Company shall be
entitled to make such reductions in the Purchase Price, in addition to those adjustments
expressly required by this Section 11, as and to the extent that in their good faith
judgment the Board of Directors of the Company shall determine to be advisable in order
that any (i) consolidation or subdivision of the Preferred Stock, (ii) issuance wholly for
cash of any shares of Preferred Stock at less than the Current Market Price, (iii) issuance
wholly for cash of shares of Preferred Stock or securities which by their terms are
convertible into or exchangeable for shares of Preferred Stock, (iv) stock dividends or (v)
issuance of rights, options or warrants referred to in this Section 11, hereafter made by
the Company to holders of its Preferred Stock shall not be taxable to such stockholders.
	 
	 	(n)	 	The Company covenants and agrees that it shall not, at any time after the Distribution
Date, (i) consolidate with any other Person (other than a Subsidiary of the Company in a
transaction which complies with Section 11(o) hereof), (ii) merge with or into any other
Person (other than a Subsidiary of the Company in a transaction which complies with Section
11(o) hereof), or (iii) sell or transfer (or permit any Subsidiary to sell or transfer), in
one transaction, or a series of related transactions, assets, cash flow or earning power
aggregating more than 50% of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to any other Person or Persons (other than the Company
and/or any of its Subsidiaries in one or more transactions each of which complies with
Section 11(o) hereof), if (x) at the time of or immediately after such consolidation,
merger or sale there are any rights, warrants or other instruments or securities
outstanding or agreements in effect which would substantially diminish or otherwise
eliminate the benefits intended to be afforded by the Rights or (y) prior to,
simultaneously with or immediately after such consolidation, merger or sale, the
stockholders of the Person who constitutes, or would constitute, the “Principal Party” for
purposes of Section 13(a) hereof shall have received a distribution of Rights previously
owned by such Person or any of its Affiliates and Associates.
	 
	 	(o)	 	The Company covenants and agrees that, after the Distribution Date, it will not, except
as permitted by Section 23 or Section 26 hereof, take (or permit any Subsidiary to take)
any action if at the time such action is taken it is reasonably foreseeable that such
action will diminish substantially or otherwise eliminate the benefits intended to be
afforded by the Rights.
	 
	 	(p)	 	Anything in this Agreement to the contrary notwithstanding, in the event that the
Company shall at any time after the Rights Dividend Declaration Date and prior to the
Distribution Date (i) declare a dividend on the outstanding shares of Common Stock payable
in shares of Common Stock, (ii) subdivide the outstanding shares of Common Stock, or (iii)
combine or consolidate the outstanding shares of Common Stock into a smaller number of
 shares, the

- 22 -

 

	 	 	 	number of Rights associated with each share of Common Stock then outstanding, or issued or
delivered thereafter but prior to the Distribution Date, shall be proportionately adjusted
so that the number of Rights thereafter associated with each share of Common Stock following
any such event shall equal the result obtained by multiplying the number of Rights
associated with each share of Common Stock immediately prior to such event by a fraction the
numerator which shall be the total number of shares of Common Stock outstanding immediately
prior to the occurrence of the event and the denominator of which shall be the total number
of shares of Common Stock outstanding immediately following the occurrence of such event.

Section 12. Certificate of Adjusted Purchase Price or Number of Shares. Whenever an
adjustment is made as provided in Section 11 and Section 13 hereof, the Company shall (a) promptly
prepare a certificate setting forth such adjustment and a brief statement of the facts accounting
for such adjustment, (b) promptly file with the Rights Agent, and with each transfer agent for the
Preferred Stock and the Common Stock, a copy of such certificate, and (c) mail a brief summary
thereof to each holder of a Rights Certificate (or, if prior to the Distribution Date, to each
holder of a certificate representing shares of Common Stock) in accordance with Section 25 hereof.
The Rights Agent shall be fully protected in relying on any such certificate and on any adjustment
therein contained.

Section 13. Consolidation, Merger or Sale or Transfer of Assets, Cash Flow or Earning
Power.

	 	(a)	 	In the event that, following the Stock Acquisition Date, directly or indirectly, (x)
the Company shall consolidate with, or merge with and into, any other Person (other than a
Subsidiary of the Company in a transaction which complies with Section 11(o) hereof), and
the Company shall not be the continuing or surviving corporation of such consolidation or
merger, (y) any Person (other than a Subsidiary of the Company in a transaction which
complies with Section 11(o) hereof) shall consolidate with, or merge with or into, the
Company, and the Company shall be the continuing or surviving corporation of such
consolidation or merger and, in connection with such consolidation or merger, all or part
of the outstanding shares of Common Stock shall be changed into or exchanged for stock or
other securities of any other Person or cash or any other property, or (z) the Company
shall sell or otherwise transfer (or one or more of its Subsidiaries shall sell or
otherwise transfer), in one transaction or a series of related transactions, assets, cash
flow or earning power aggregating more than 50% of the assets, cash flow or earning power
of the Company and its Subsidiaries (taken as a whole) to any Person or Persons (other than
the Company or any Subsidiary of the Company in one or more transactions each of which
complies with Section 11(o) hereof), then, and in each such case, proper provision shall be
made so that: (i) each holder of a Right, except as provided in Section 7(e) hereof, shall
thereafter have the right to receive, upon the exercise thereof at the then current
Purchase Price in accordance with the terms of this Agreement and in lieu of shares of
Preferred Stock, such number of validly authorized and issued, fully paid, non-assessable
and freely tradeable shares of Common Stock of the Principal Party (as such term is
hereinafter defined), not subject to any liens, encumbrances, rights of first refusal or
other adverse claims, as shall be equal to the result obtained by (1) multiplying the then
current Purchase Price by the number of one ten-thousandths of a share of Preferred Stock
for which a Right is exercisable immediately prior to the first occurrence of a Section 13
Event (or, if a Section

- 23 -

 

	 	 	 	11(a)(ii) Event has occurred prior to the first occurrence of a Section 13 Event,
multiplying the number of such one ten-thousandths of a share for which a Right was
exercisable immediately prior to the first occurrence of a Section 11(a)(ii) Event by the
Purchase Price in effect immediately prior to such first occurrence of a Section 11(a)(ii)
Event), and (2) dividing that product (which, following the first occurrence of a Section 13
Event, shall be referred to as the “Purchase Price” for each Right and for all purposes of
this Agreement) by 50% of the Current Market Price (determined pursuant to Section 11(d)(i)
hereof) per share of the Common Stock of such Principal Party on the date of consummation of
such Section 13 Event; (ii) such Principal Party shall thereafter be liable for, and shall
assume, by virtue of such Section 13 Event, all the obligations and duties of the Company
pursuant to this Agreement; (iii) the term “Company” shall thereafter be deemed to refer to
such Principal Party, it being specifically intended that the provisions of Section 11
hereof shall apply only to such Principal Party following the first occurrence of a Section
13 Event; (iv) such Principal Party shall take such steps (including, but not limited to,
the reservation of a sufficient number of shares of its Common Stock) in connection with the
consummation of any such transaction as may be necessary to assure that the provisions
hereof shall thereafter be applicable, as nearly as reasonably may be, in relation to its
 shares of Common Stock thereafter deliverable upon the exercise of the Rights; and (v) the
provisions of Section 11(a)(ii) hereof shall be of no effect following the first occurrence
of any Section 13 Event.
	 
	 	(b)	 	“Principal Party” shall mean:

	 	(i)	 	in the case of any transaction described in clause (x) or (y) of the first
sentence of Section 13(a), the Person that is the issuer of any securities into which
 shares of Common Stock of the Company are converted in such merger or consolidation,
and if no securities are so issued, the Person that is the other party to such merger
or consolidation; and
	 
	 	(ii)	 	in the case of any transaction described in clause (z) of the first sentence of
Section 13(a), the Person that is the party receiving the greatest portion of the
assets, cash flow or earning power transferred pursuant to such transaction or
transactions; provided, however, that in any such case, (1) if the Common Stock of such
Person is not at such time and has not been continuously over the preceding
twelve-month period registered under Section 12 of the Exchange Act, and such Person is
a direct or indirect Subsidiary of another Person the Common Stock of which is and has
been so registered, “Principal Party” shall refer to such other Person; and (2) in case
such Person is a Subsidiary, directly or indirectly, of more than one Person, the
Common Stocks of two or more of which are and have been so registered, “Principal
Party” shall refer to whichever of such Persons is the issuer of the Common Stock
having the greatest aggregate market value.

	 	(c)	 	The Company shall not consummate any such consolidation, merger, sale or transfer
unless the Principal Party shall have a sufficient number of authorized shares of its
Common Stock which have not been issued or reserved for issuance to permit the exercise in
full of the Rights in accordance with this Section 13 and unless prior thereto the Company
and such Principal Party shall have executed and delivered to the Rights Agent a
supplemental agreement providing for the terms set forth in paragraphs (a) and (b) of this
Section 13 and

- 24 -

 

	 	 	 	further providing that, as soon as practicable after the date of any consolidation, merger
or sale of assets mentioned in paragraph (a) of this Section 13, the Principal Party will:

	 	(i)	 	prepare and file a registration statement under the Act, with respect to the
Rights and the securities purchasable upon exercise of the Rights on an appropriate
form, and will use its best efforts to cause such registration statement to (A) become
effective as soon as practicable after such filing and (B) remain effective (with a
prospectus at all times meeting the requirements of the Act) until the Expiration Date;
and
	 
	 	(ii)	 	take all such other action as may be necessary to enable the Principal Party to
issue the securities purchasable upon exercise of the Rights, including but not limited
to the registration or qualification of such securities under all requisite securities
laws of jurisdictions of the various states and the listing of such securities on such
exchanges and trading markets as may be necessary or appropriate; and
	 
	 	(iii)	 	will deliver to holders of the Rights historical financial statements for the
Principal Party and each of its Affiliates which comply in all respects with the
requirements for registration on Form 10 under the Exchange Act.
	 
	 	 	 	The provisions of this Section 13 shall similarly apply to successive mergers or
consolidations or sales or other transfers. In the event that a Section 13 Event shall
occur at any time after the occurrence of a Section 11(a)(ii) Event, the Rights which
have not theretofore been exercised shall thereafter become exercisable in the manner
described in Section 13(a).

Section 14. Fractional Rights and Fractional Shares.

	 	(a)	 	The Company shall not be required to issue fractions of Rights, except prior to the
Distribution Date as provided in Section 11(p) hereof, or to distribute Rights Certificates
which evidence fractional Rights. In lieu of such fractional Rights, there shall be paid
to the registered holders of the Rights Certificates with regard to which such fractional
Rights would otherwise be issuable, an amount in cash equal to the same fraction of the
current market value of a whole Right. For purposes of this Section 14(a), the current
market value of a whole Right shall be the closing price of the Rights for the Trading Day
immediately prior to the date on which such fractional Rights would have been otherwise
issuable. The closing price of the Rights for any day shall be the last sale price,
regular way, or, in case no such sale takes place on such day, the average of the closing
bid and asked prices, regular way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to trading on
the New York Stock Exchange or, if the Rights are not listed or admitted to trading on the
New York Stock Exchange, as reported in the principal consolidated transaction reporting
system with respect to securities listed on the principal national securities exchange on
which the Rights are listed or admitted to trading, or if the Rights are not listed or
admitted to trading on any national securities exchange, the last quoted price or, if not
so quoted, the average of the high bid and low asked prices in the over-the-counter market,
as reported by NASDAQ or such system then in use or, if on any such date the Rights are not
quoted by any such

- 25 -

 

	 	 	 	organization, the average of the closing bid and asked prices as furnished by a
professional market maker making a market in the Rights selected by the Board of Directors
of the Company. If on any such date no such market maker is making a market in the Rights
the fair value of the Rights on such date as determined in good faith by the Board of
Directors of the Company shall be used.
	 
	 	(b)	 	The Company shall not be required to issue fractions of shares of Preferred Stock
(other than fractions which are integral multiples of one ten-thousandth of a share of
Preferred Stock) upon exercise of the Rights or to distribute certificates which evidence
fractional shares of Preferred Stock (other than fractions which are integral multiples of
one ten-thousandth of a share of Preferred Stock). In lieu of fractional shares of
Preferred Stock that are not integral multiples of one ten-thousandth of a share of
Preferred Stock, the Company may pay to the registered holders of Rights Certificates at
the time such Rights are exercised as herein provided an amount in cash equal to the same
fraction of the current market value of one ten-thousandth of a share of Preferred Stock.
For purposes of this Section 14(b), the current market value of one ten-thousandth of a
share of Preferred Stock shall be one ten-thousandth of the closing price of a share of
Preferred Stock (as determined pursuant to Section 11(d)(ii) hereof) for the Trading Day
immediately prior to the date of such exercise.
	 
	 	(c)	 	Following the occurrence of a Triggering Event, the Company shall not be required to
issue
fractions of shares of Common Stock upon exercise of the Rights or to distribute
certificates which evidence fractional shares of Common Stock. In lieu of fractional shares
of Common Stock, the Company may pay to the registered holders of Rights Certificates at the
time
such Rights are exercised as herein provided an amount in cash equal to the same fraction of
the current market value of one (1) share of Common Stock. For purposes of this Section
14(c), the current market value of one (1) share of Common Stock shall be the closing price
of one (1) share of Common Stock (as determined pursuant to Section 11(d)(i) hereof) for the
Trading Day immediately prior to the date of such exercise.
	 
	 	(d)	 	The holder of a Right by the acceptance of the Rights expressly waives his or her right
to receive any fractional Rights or any fractional shares upon exercise of a Right, except
as permitted by this Section 14.

Section 15. Rights of Action. All rights of action in respect of this Agreement, except
the rights of action that are given to the Rights Agent under Section 18 hereof, are vested in the
respective registered holders of the Rights Certificates (and, prior to the Distribution Date, the
registered holders of the Common Stock); and any registered holder of any Rights Certificate (or,
prior to the Distribution Date, of the Common Stock), without the consent of the Rights Agent or of
the holder of any other Rights Certificate (or, prior to the Distribution Date, of the Common
Stock), may, in such holder’s own behalf and for such holder’s own benefit, enforce, and may
institute and maintain any suit, action or proceeding against the Company to enforce, or otherwise
act in respect of, such holder’s right to exercise the Rights evidenced by such Rights Certificate
in the manner provided in such Rights Certificate and in this Agreement. Without limiting the
foregoing or any remedies available to the holders of Rights, it is specifically acknowledged that
the holders of Rights would not have an adequate remedy at law for any breach of this Agreement and
shall be

- 26 -

 

entitled to specific performance of the obligations hereunder and injunctive relief against actual
or threatened violations of the obligations hereunder of any Person subject to this Agreement.

Section 16. Agreement of Rights Holders. Every holder of a Right by accepting the same
consents and agrees with the Company and the Rights Agent and with every other holder of a Right
that:

	 	(a)	 	prior to the Distribution Date, the Rights will be transferable only in connection with
the transfer of Common Stock;
	 
	 	(b)	 	after the Distribution Date, the Rights Certificates are transferable only on the
registry books of the Rights Agent if surrendered at the principal office or offices of the
Rights Agent designated for such purposes, duly endorsed or accompanied by a proper
instrument of transfer and with the appropriate forms and certificates fully executed;
	 
	 	(c)	 	subject to Section 6(a) and Section 7(f) hereof, the Company and the Rights Agent may
deem and treat the Person in whose name a Rights Certificate (or, prior to the Distribution
Date, the associated Common Stock certificate) is registered as the absolute owner thereof
and of the Rights evidenced thereby (notwithstanding any notations of ownership or writing
on the Rights Certificates or the associated Common Stock certificate made by anyone other
than the Company or the Rights Agent) for all purposes whatsoever, and neither the Company
nor the Rights Agent, subject to the last sentence of Section 7(e) hereof, shall be
required to be affected by any notice to the contrary; and
	 
	 	(d)	 	notwithstanding anything in this Agreement to the contrary, neither the Company nor the
Rights Agent shall have any liability to any holder of a Right or other Person as a result
of its inability to perform any of its obligations under this Agreement by reason of any
preliminary or permanent injunction or other order, decree or ruling issued by a court of
competent jurisdiction or by a governmental, regulatory or administrative agency or
commission, or any statute, rule, regulation or executive order promulgated or enacted by
any governmental authority, prohibiting or otherwise restraining performance of such
obligation; provided, however, the Company must use its best efforts to have any such
order, decree or ruling lifted or otherwise overturned as soon as possible.

Section 17. Rights Certificate Holder Not Deemed a Stockholder. No holder, as such, of
any Rights Certificate shall be entitled to vote, receive dividends or be deemed for any purpose
the holder of the number of one ten-thousandths of a share of Preferred Stock or any other
securities of the Company which may at any time be issuable on the exercise of the Rights
represented thereby, nor shall anything contained herein or in any Rights Certificate be construed
to confer upon the holder of any Rights Certificate, as such, any of the rights of a stockholder of
the Company or any right to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting stockholders (except as provided in Section
24 hereof), or to receive dividends or subscription rights, or otherwise, until the Right or Rights
evidenced by such Rights Certificate shall have been exercised in accordance with the provisions
hereof.

Section 18. Concerning the Rights Agent.

- 27 -

 

	 	(a)	 	The Company agrees to pay to the Rights Agent reasonable compensation for all services
rendered by it hereunder and, from time to time, on demand of the Rights Agent, its
reasonable expenses and counsel fees and disbursements and other disbursements incurred in
the administration and execution of this Agreement and the exercise and performance of its
duties hereunder. The Company also agrees to indemnify the Rights Agent for, and to hold
it harmless against, any loss, liability, or expense, incurred without negligence, bad
faith or willful misconduct on the part of the Rights Agent, for anything done or omitted
by the Rights Agent in connection with the acceptance and administration of this Agreement,
including the costs and expenses of defending against any claim of liability in the
premises. In no case shall the Rights Agent be liable for special, indirect, incidental or
consequential loss or damage.
	 
	 	(b)	 	The Rights Agent shall be protected and shall incur no liability for or in respect of
any action taken, suffered or omitted by it in connection with its administration of this
Agreement in reliance upon any Rights Certificate or certificate for Common Stock or for
other securities of the Company, instrument of assignment or transfer, power of attorney,
endorsement, affidavit, letter, notice, direction, consent, certificate, statement, or
other paper or document believed by it to be genuine and to be signed, executed and, where
necessary, verified or acknowledged, by the proper Person or Persons.

Section 19. Merger or Consolidation or Change of Name of Rights Agent.

	 	(a)	 	Any corporation into which the Rights Agent or any successor Rights Agent may be merged
or with which it may be consolidated, or any corporation resulting from any merger or
consolidation to which the Rights Agent or any successor Rights Agent shall be a party, or
any corporation succeeding to the corporate trust, stock transfer or other shareholder
services business of the Rights Agent or any successor Rights Agent, shall be the successor
to the Rights Agent under this Agreement without the execution or filing of any paper or
any further act on the part of any of the parties hereto; but only if such corporation
would be eligible for appointment as a successor Rights Agent under the provisions of
Section 21 hereof. In case at the time such successor Rights Agent shall succeed to the
agency created by this Agreement, any of the Rights Certificates shall have been
countersigned but not delivered, any such successor Rights Agent may adopt the
countersignature of a predecessor Rights Agent and deliver such Rights Certificates so
countersigned; and in case at that time any of the Rights Certificates shall not have been
countersigned, any successor Rights Agent may countersign such Rights Certificates either
in the name of the predecessor or in the name of the successor Rights Agent; and in all
such cases such Rights Certificates shall have the full force provided in the Rights
Certificates and in this Agreement.
	 
	 	(b)	 	In case at any time the name of the Rights Agent shall be changed and at such time any
of the Rights Certificates shall have been countersigned but not delivered, the Rights
Agent may adopt the countersignature under its prior name and deliver Rights Certificates
so countersigned; and in case at that time any of the Rights Certificates shall not have
been countersigned, the Rights Agent may countersign such Rights Certificates either in its
prior name or in its changed name; and in all such cases such Rights Certificates shall
have the full force provided in the Rights Certificates and in this Agreement.

- 28 -

 

Section 20. Duties of Rights Agent. The Rights Agent undertakes the duties and
obligations imposed by this Agreement upon the following terms and conditions, by all of which the
Company and the holders of Rights Certificates, by their acceptance thereof, shall be bound:

	 	(a)	 	The Rights Agent may consult with legal counsel (who may be legal counsel for the
Company), and the advice of such counsel shall be full and complete authorization and
protection to the Rights Agent as to any action taken or omitted by it in good faith and in
accordance with such opinion.
	 
	 	(b)	 	Whenever in the performance of its duties under this Agreement the Rights Agent shall
deem it necessary or desirable that any fact or matter (including, without limitation, the
identity of any Acquiring Person and the determination of Current Market Price) be proved
or established by the Company prior to taking or suffering any action hereunder, such fact
or matter (unless other evidence in respect thereof be herein specifically prescribed) may
be deemed to be conclusively proved and established by a certificate signed by the Chairman
of the Board, the Vice Chairman, the Chief Executive Officer, the President, any Vice
President, the Treasurer, any Assistant Treasurer, the Secretary or any Assistant Secretary
of the Company and delivered to the Rights Agent; and such certificate shall be full
authorization to the Rights Agent for any action taken or suffered in good faith by it
under the provisions of this Agreement in reliance upon such certificate.
	 
	 	(c)	 	The Rights Agent shall be liable hereunder only for its own negligence, bad faith or
willful misconduct.
	 
	 	(d)	 	The Rights Agent shall not be liable for or by reason of any of the statements of fact
or recitals contained in this Agreement or in the Rights Certificates or be required to
verify the same (except as to its countersignature on such Rights Certificates), but all
such statements and recitals are and shall be deemed to have been made by the Company only.
	 
	 	(e)	 	The Rights Agent shall not be under any responsibility in respect of the validity of
this Agreement or the execution and delivery hereof (except the due execution hereof by the
Rights Agent) or in respect of the validity or execution of any Rights Certificate (except
its countersignature thereof); nor shall it be responsible for any breach by the Company of
any covenant or condition contained in this Agreement or in any Rights Certificate; nor
shall it be responsible for any adjustment required under the provisions of Section 11 or
Section 13 hereof or responsible for the manner, method or amount of any such adjustment or
the ascertaining of the existence of facts that would require any such adjustment (except
with respect to the exercise of Rights evidenced by Rights Certificates after actual notice
of any such adjustment); nor shall it by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation of any shares of Common
Stock or Preferred Stock to be issued pursuant to this Agreement or any Rights Certificate
or as to whether any shares of Common Stock or Preferred Stock will, when so issued, be
validly authorized and issued, fully paid and nonassessable.
	 
	 	(f)	 	The Company agrees that it will perform, execute, acknowledge and deliver or cause to
be performed, executed, acknowledged and delivered all such further and other acts,

- 29 -

 

	 	 	 	instruments and assurances as may reasonably be required by the Rights Agent for the
carrying out or performing by the Rights Agent of the provisions of this Agreement.
	 
	 	(g)	 	The Rights Agent is hereby authorized and directed to accept instructions with respect
to the performance of its duties hereunder from the Chairman of the Board, the Vice
Chairman, the Chief Executive Officer, the President, any Vice President, the Secretary,
any Assistant Secretary, the Treasurer or any Assistant Treasurer of the Company, and to
apply to such officers for advice or instructions in connection with its duties, and it
shall not be liable for any action taken or suffered to be taken by it in good faith in
accordance with instructions of any such officer.
	 
	 	(h)	 	The Rights Agent and any stockholder, director, officer or employee of the Rights Agent
may buy, sell or deal in any of the Rights or other securities of the Company or become
pecuniarily interested in any transaction in which the Company may be interested, or
contract with or lend money to the Company or otherwise act as fully and freely as though
it were not Rights Agent under this Agreement. Nothing herein shall preclude the Rights
Agent from acting in any other capacity for the Company or for any other legal entity.
	 
	 	(i)	 	The Rights Agent may execute and exercise any of the rights or powers hereby vested in
it or perform any duty hereunder either itself or by or through its attorneys or agents,
and the Rights Agent shall not be answerable or accountable for any act, default, neglect
or misconduct of any such attorneys or agents or for any loss to the Company resulting from
any such act, default, neglect or misconduct; provided, however, reasonable care was
exercised in the selection and continued employment thereof.
	 
	 	(j)	 	No provision of this Agreement shall require the Rights Agent to expend or risk its own
funds or otherwise incur any financial liability in the performance of any of its duties
hereunder or in the exercise of its rights if there shall be reasonable grounds for
believing that repayment of such funds or adequate indemnification against such risk or
liability is not reasonably assured to it.
	 
	 	(k)	 	If, with respect to any Rights Certificate surrendered to the Rights Agent for exercise
or transfer, the certificate attached to the form of assignment or form of election to
purchase, as the case may be, has either not been completed or indicates an affirmative
response to clause 1 and/or 2 thereof, the Rights Agent shall not take any further action
with respect to such requested exercise of transfer without first consulting with the
Company.

Section 21. Change of Rights Agent. The Rights Agent or any successor Rights Agent may
resign and be discharged from its duties under this Agreement upon thirty (30) days’ notice in
writing mailed to the Company, and to each transfer agent of the Common Stock and Preferred Stock,
by registered or certified mail, and, if such resignation occurs after the Distribution Date, to
the registered holders of the Rights Certificates by first-class mail. The Company may, in its
sole discretion, remove the Rights Agent or any successor Rights Agent upon thirty (30) days’
notice in writing, mailed to the Rights Agent or successor Rights Agent, as the case may be, and to
each transfer agent of the Common Stock and Preferred Stock, by registered or certified mail, and,
if such resignation occurs after the Distribution Date, to the holders of the Rights Certificates
by first-

- 30 -

 

class mail. If the Rights Agent shall resign or be removed or shall otherwise become incapable of
acting, the Company shall appoint a successor to the Rights Agent. If the Company shall fail to
make such appointment within a period of thirty (30) days after giving notice of such removal or
after it has been notified in writing of such resignation or incapacity by the resigning or
incapacitated Rights Agent or by the holder of a Rights Certificate (who shall, with such notice,
submit his Rights Certificate for inspection by the Company), then any registered holder of any
Rights Certificate may apply to any court of competent jurisdiction for the appointment of a new
Rights Agent. Any successor Rights Agent, whether appointed by the Company or by such a court,
shall be either (a) a legal business entity organized and doing business under the laws of the
United States or of any state of the United States, in good standing, which is authorized under
such laws to exercise corporate trust powers and is subject to supervision or examination by
federal or state authority and which has at the time of its appointment as Rights Agent a combined
capital and surplus of at least $100,000,000 or (b) an Affiliate of a legal business entity
described in clause (a) of this sentence. After appointment, the successor Rights Agent shall be
vested with the same powers, rights, duties and responsibilities as if it had been originally named
as Rights Agent without further act or deed; but the predecessor Rights Agent shall deliver and
transfer to the successor Rights Agent any property at the time held by it hereunder, and execute
and deliver any further assurance, conveyance, act or deed necessary for the purpose. Not later
than the effective date of any such appointment, the Company shall file notice thereof in writing
with the predecessor Rights Agent and each transfer agent of the Common Stock and the Preferred
Stock, and, if such appointment occurs after the Distribution Date, mail a notice thereof in
writing to the registered holders of the Rights Certificates. Failure to give any notice provided
for in this Section 21, however, or any defect therein, shall not affect the legality or validity
of the resignation or removal of the Rights Agent or the appointment of the successor Rights Agent,
as the case may be.

Section 22. Issuance of New Rights Certificates. Notwithstanding any of the provisions of
this Agreement or of the Rights to the contrary, the Company may, at its option, issue new Rights
Certificates evidencing Rights in such form as may be approved by its Board of Directors to reflect
any adjustment or change in the Purchase Price and the number or kind or class of shares or other
securities or property purchasable under the Rights Certificates made in accordance with the
provisions of this Agreement. In addition, in connection with the issuance or sale of shares of
Common Stock following the Distribution Date and prior to the redemption or expiration of the
Rights, the Company (a) shall, with respect to shares of Common Stock so issued or sold pursuant to
the exercise of stock options or under any employee plan or arrangement, granted or awarded as of
the Distribution Date, or upon the exercise, conversion or exchange of securities hereinafter
issued by the Company, and (b) may, in any other case, if deemed necessary or appropriate by the
Board of Directors of the Company, issue Rights Certificates representing the appropriate number of
Rights in connection with such issuance or sale; provided, however, that (i) no such Rights
Certificate shall be issued if, and to the extent that, the Company shall be advised by counsel
that such issuance would create a significant risk of material adverse tax consequences to the
Company or the Person to whom such Rights Certificate would be issued, and (ii) no such Rights
Certificate shall be issued if, and to the extent that, appropriate adjustment shall otherwise have
been made in lieu of the issuance thereof.

Section 23. Redemption and Termination.

	 	(a)	 	The Board of Directors of the Company may, at its option, at any time prior to the
earlier of (i) the close of business on the tenth day following the Stock Acquisition Date
(or, if the

- 31 -

 

	 	 	 	Stock Acquisition Date shall have occurred prior to the Record Date, the close of business
on the twentieth day following the Record Date), or (ii) the Final Expiration Date, redeem
all but not less than all the then outstanding Rights at a redemption price of $0.001 per
Right, as such amount may be appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the date hereof (such redemption price being
hereinafter referred to as the “Redemption Price”); provided, however, if the Board of
Directors of the Company authorizes redemption of the Rights in either of the circumstances
set forth in clauses (i) and (ii) below, then such authorization shall require the
concurrence of a majority of the members of the Board of Directors of the Company: (i) such
authorization occurs on or after the time a Person becomes an Acquiring Person, or (ii) such
authorization occurs on or after the date of a change (resulting from a proxy or consent
solicitation or an action by written consent of stockholders, whether or not made pursuant
to, and in accordance with, the applicable provisions of the General Rules and Regulations
under the Exchange Act) in a majority of the directors in office at the commencement of such
solicitation, or prior to such written consent, if any Person who is a participant in such
solicitation, or who signed such consent, has stated (or, if upon the commencement of such
solicitation, a majority of the Board of Directors of the Company has determined in good
faith) that such Person (or any of its Affiliates or Associates) intends to take, or may
consider taking, any action which would result in such Person becoming an Acquiring Person
or which would cause the occurrence of a Triggering Event unless, concurrent with such
solicitation, such Person (or one or more of its Affiliates or Associates) is making a cash
tender offer pursuant to a Schedule 14D-1 (or any successor form) filed with the Securities
and Exchange Commission for all outstanding shares of Common Stock not beneficially owned by
such Person (or by its Affiliates or Associates). Notwithstanding anything contained in
this Agreement to the contrary, the Rights shall not be exercisable after the first
occurrence of a Section 11(a)(ii) Event until such time as the Company’s right of redemption
hereunder has expired. The Company may, at its option, pay the Redemption Price in cash,
shares of Common Stock (based on the “Current Market Price”, as defined in Section 11(d)(i)
hereof, of the Common Stock at the time of redemption) or any other form of consideration
deemed appropriate by the Board of Directors.

	 	(b)	 	Immediately upon the action of the Board of Directors of the Company ordering the
redemption of the Rights, evidence of which shall have been filed with the Rights Agent and
without any further action and without any notice, the right to exercise the Rights will
terminate and the only right thereafter of the holders of Rights shall be to receive the
Redemption Price for each Right so held. Promptly after the action of the Board of
Directors ordering the redemption of the Rights, the Company shall give notice of such
redemption to the Rights Agent and the holders of the then outstanding Rights by mailing
such notice to all such holders at each holder’s last address as it appears upon the
registry books of the Rights Agent or, prior to the Distribution Date, on the registry
books of the transfer agent for the Common Stock. Any notice which is mailed in the manner
herein provided shall be deemed given, whether or not the holder receives the notice. Each
such notice of redemption will state the method by which the payment of the Redemption
Price will be made.

Section 24. Notice of Certain Events.

- 32 -

 

	 	(a)	 	In case the Company shall propose, at any time after the Distribution Date, (i) to pay
any dividend payable in stock of any class to the holders of Preferred Stock or to make any
other distribution to the holders of Preferred Stock (other than a regular quarterly cash
dividend out of earnings or retained earnings of the Company), or (ii) to offer to the
holders of Preferred Stock rights or warrants to subscribe for or to purchase any
additional shares of Preferred Stock or shares of stock of any class or any other
securities, rights or options, or (iii) to effect any reclassification of its Preferred
Stock (other than a reclassification involving only the subdivision of outstanding shares
of Preferred Stock), or (iv) to effect any consolidation or merger into or with any other
Person (other than a Subsidiary of the Company in a transaction which complies with Section
11(o) hereof), or to effect any sale or other transfer (or to permit one or more of its
Subsidiaries to effect any sale or other transfer), in one transaction or a series of
related transactions, of more than 50% of the assets, cash flow or earning power of the
Company and its Subsidiaries (taken as a whole) to any other Person or Persons (other than
the Company and/or any of its Subsidiaries in one or more transactions each of which
complies with Section 11(o) hereof), or (v) to effect the liquidation, dissolution or
winding up of the Company, then, in each such case, the Company shall give to each holder
of a Rights Certificate, to the extent feasible and in accordance with Section 25 hereof, a
notice of such proposed action, which shall specify the record date for the purposes of
such stock dividend, distribution of rights or warrants, or the date on which such
reclassification, consolidation, merger, sale, transfer, liquidation, dissolution, or
winding up is to take place and the date of participation therein by the holders of the
shares of Preferred Stock, if any such date is to be fixed, and such notice shall be so
given in the case of any action covered by clause (i) or (ii) above at least twenty (20)
days prior to the record date for determining holders of the shares of Preferred Stock for
purposes of such action, and in the case of any such other action, at least twenty (20)
days prior to the date of the taking of such proposed action or the date of participation
therein by the holders of the shares of Preferred Stock, whichever shall be the earlier.
	 
	 	(b)	 	In case any of the events set forth in Section 11(a)(ii) hereof shall occur, then, in
any such
case, (i) the Company shall as soon as practicable thereafter give to each holder of a
Rights Certificate, to the extent feasible and in accordance with Section 25 hereof, a
notice of the occurrence of such event, which shall specify the event and the consequences
of the event
to holders of Rights under Section 11(a)(ii) hereof, and (ii) all references in the
preceding paragraph to Preferred Stock shall be deemed thereafter to refer to Common Stock
and/or, if appropriate, other securities.

Section 25. Notices. Notices or demands authorized by this Agreement to be given or made
by the Rights Agent or by the holder of any Rights Certificate to or on the Company shall be
sufficiently given or made if sent by first-class mail, postage prepaid, addressed (until another
address is filed in writing with the Rights Agent) as follows:

Toll Brothers, Inc.

250 Gibraltar Road

Horsham, Pennsylvania 19044

Attention: Chief Executive Officer

- 33 -

 

Subject to the provisions of Section 21, any notice or demand authorized by this Agreement to be
given or made by the Company or by the holder of any Rights Certificate to or on the Rights Agent
shall be sufficiently given or made if sent by first-class mail, postage prepaid, addressed (until
another address is filed in writing with the Company) as follows:

American Stock Transfer & Trust Company, LLC

59 Maiden Lane

New York, NY 10038

Notices or demands authorized by this Agreement to be given or made by the Company or the Rights
Agent to the holder of any Rights Certificate (or, if prior to the Distribution Date, to the holder
of certificates representing shares of Common Stock) shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed to such holder at the address of such holder as shown
on the registry books of the Company.

Section 26. Supplements and Amendments. Prior to the Distribution Date and subject to the
penultimate sentence of this Section 26, the Company and the Rights Agent shall, if the Company so
directs, supplement or amend any provision of this Agreement without the approval of any holders of
certificates representing shares of Common Stock. From and after the Distribution Date and subject
to the penultimate sentence of this Section 26, the Company and the Rights Agent shall, if the
Company so directs, supplement or amend this Agreement without the approval of any holders of
Rights Certificates in order (i) to cure any ambiguity, (ii) to correct or supplement any provision
contained herein which may be defective or inconsistent with any other provisions herein, (iii) to
shorten or lengthen any time period hereunder, or (iv) to change or supplement the provisions
hereunder in any manner which the Company may deem necessary or desirable and which shall not
adversely affect the interests of the holders of Rights Certificates (other than an Acquiring
Person or an Affiliate or Associate of an Acquiring Person); provided, however, this Agreement may
not be supplemented or amended to lengthen, pursuant to clause (iii) of this sentence, (A) a time
period relating to when the Rights may be redeemed at such time as the Rights are not then
redeemable, or (B) any other time period unless such lengthening is for the purpose of protecting,
enhancing or clarifying the rights of, and/or the benefits to, the holders of Rights. Upon the
delivery of a certificate from an appropriate officer of the Company which states that the proposed
supplement or amendment is in compliance with the terms of this Section 26, the Rights Agent shall
execute such supplement or amendment. Notwithstanding anything contained in this Agreement to the
contrary, no supplement or amendment shall be made which changes the Redemption Price, the Final
Expiration Date, the Purchase Price or the number of one ten-thousandths of a share of Preferred
Stock for which a Right is exercisable and following the first occurrence of an event set forth in
clauses (i) and (ii) of the first proviso to Section 23(a) hereof, any supplement or amendment
shall require the concurrence of a majority of the members of the Board of Directors of the
Company. Prior to the Distribution Date, the interests of the holders of Rights shall be deemed
coincident with the interests of the holders of Common Stock.

Section 27. Exchange.

	 	 	 	 	 	 	 
	 

	 	(a)
	 	(i)
	 	The Company may, at its option, at any time after the Stock Acquisition Date, upon
resolution by the Board of Directors of the Company, exchange all or part of the then
outstanding and exercisable Rights (which shall not include Rights that have become

- 34 -

 

	 	 	 	 	 	 	 
	 

	 	 	 	 	 	void pursuant to the provisions of Section 7(e) hereof) for Common Stock at an exchange
ratio of one share of Common Stock per Right, appropriately adjusted to reflect any
stock split, stock dividend or similar transaction occurring after the date of this
Agreement (such exchange ratio being hereinafter referred to as the “Section 27(a)(i)
Exchange Ratio”). Notwithstanding the foregoing, the Company may not effect such
exchange at any time after any Acquiring Person, together with all Affiliates and
Associates of such Acquiring Person, becomes the Beneficial Owner of 50% or more of the
shares of Common Stock then outstanding.
	 
	 	 	 	 	 	 
	 

	 	 	 	(ii)
	 	The Company may, at its option, at any time after the Stock Acquisition Date,
upon resolution by the Board of Directors of the Company, exchange all or part of the
then outstanding and exercisable Rights (which shall not include Rights that have
become void pursuant to the provisions of Section 7(e) hereof) for Common Stock at an
exchange ratio specified in the following sentence, as appropriately adjusted to
reflect any stock split, stock dividend or similar transaction occurring after the date
of this Agreement. Subject to such adjustment, each Right may be exchanged for that
number of shares of Common Stock obtained by dividing the Adjustment Spread (as defined
below) by the then Current Market Price (determined pursuant to Section 11(d) hereof)
per share of Common Stock on the earlier of (i) the date on which any Person becomes an
Acquiring Person or (ii) the date on which a tender or exchange offer by any Person
(other than an Exempted Person, the Company, any Subsidiary of the Company, any
employee benefit plan of the Company or of any Subsidiary of the Company, or any Person
organized, appointed or established by the Company for or pursuant to the terms of any
such plan) is first published or sent or given within the meaning of Rule 14d-4(a) of
the General Rules and Regulations under the Exchange Act, if upon consummation thereof
such Person would be the Beneficial Owner of 4.95% or more of the shares of Common
Stock then outstanding (such exchange ratio being the “Section 27(a)(ii) Exchange
Ratio”). The “Adjustment Spread” shall equal (x) the aggregate market price on the
date of such event of the number of Adjustment Shares determined pursuant to Section
11(a)(ii) minus (y) the Purchase Price.
	 
	 	 	 	 	 	 
	 

	 	 	 	(iii)
	 	 Notwithstanding anything contained in this Section 27(a) to the contrary, the
Company may not exchange any Rights pursuant to this Section 27(a) unless such exchange
is approved by a majority of the members of the Board of Directors of the Company.

	 	(b)	 	Immediately upon the action of the Board of Directors of the Company ordering the
exchange of any Rights pursuant to paragraph (a) of this Section 27 and without any further
action and without any notice, the right to exercise such Rights shall terminate and the
only right thereafter of a holder of such Rights shall be to receive that number of shares
of Common Stock equal to the number of such Rights held by such holder multiplied by the
Section 27(a)(i) Exchange Ratio or Section 27(a)(ii) Exchange Ratio, as the case may be.
The Company shall promptly give public notice of any such exchange; provided, however, that
the failure to give, or any defect in, such notice shall not affect the validity of such
exchange. The Company promptly shall mail a notice of any such exchange to all of the
holders of such Rights at their last addresses as they appear upon the registry books of
the Rights Agent. Any notice which is mailed in the manner herein provided shall be deemed

- 35 -

 

	 	 	 	given, whether or not the holder receives the notice. Each such notice of exchange will
state the method by which the exchange of the shares of Common Stock for Rights will be
effected and, in the event of any partial exchange, the number of Rights which will be
exchanged. Any partial exchange shall be effected pro rata based on the number of Rights
(other than Rights which have become void pursuant to the provisions of Section 7(e) hereof)
held by each holder of Rights.
	 
	 	(c)	 	In the event that there shall not be sufficient shares of Common Stock issued but not
outstanding or authorized but unissued to permit any exchange of Rights as contemplated in
accordance with this Section 27, the Company shall make adequate provision to substitute,
to the extent that there are insufficient shares of Common Stock available (1) cash, (2)
other equity securities of the Company, (3) debt securities of the Company, (4) other
assets or (5) any combination of the foregoing, having an aggregate value per Right equal
to (x) in the case of an exchange pursuant to Section 27(a)(i), the then current per share
market price (determined pursuant to Section 11(d) hereof) of the Common Stock multiplied
by the Section 27(a)(i) Exchange Ratio and (y) in the case of an exchange pursuant to
Section 27(a)(ii), the Adjustment Spread, where such aggregate value has been determined by
a majority of the members of the Board of Directors of the Company, after receiving advice
from a nationally recognized investment banking firm. To the extent that the Company
determines that any such substitution must be made, the Company shall provide, subject to
Section 7(e) hereof, that such substitution shall apply uniformly to all outstanding
Rights.
	 
	 	(d)	 	The Company shall not be required to issue fractions of shares of Common Stock or to
distribute certificates which evidence fractional shares of Common Stock. In lieu of such
fractional shares of Common Stock, the Company shall pay to the registered holders of the
Rights Certificates with regard to which such fractional shares of Common Stock would
otherwise be issuable an amount in cash equal to the same fraction of the current market
value of a whole share of Common Stock. For the purposes of this paragraph (d), the
current market value of a whole share of Common Stock shall be the closing price of a share
of Common Stock (as determined pursuant to the second sentence of Section 11(d) hereof) for
the Trading Day immediately prior to the date of the exchange pursuant to this Section 27.

Section 28. Successors. All the covenants and provisions of this Agreement by or for the
benefit of the Company or the Rights Agent shall bind and inure to the benefit of their respective
successors and assigns hereunder.

Section 29. Determinations and Actions by the Board of Directors, etc. For all purposes
of this Agreement, any calculation of the number of shares of Common Stock outstanding at any
particular time, including for purposes of determining the particular percentage of such
outstanding shares of Common Stock of which any Person is the Beneficial Owner, shall be made in
accordance with the last sentence of Rule 13d-3(d)(1)(i) of the General Rules and Regulations under
the Exchange Act. The Board of Directors of the Company (with, where specifically provided for
herein, the concurrence of a majority of the members of the Board of Directors of the Company)
shall have the exclusive power and authority to administer this Agreement and to exercise all
rights and powers specifically granted to the Board (with, where specifically provided for herein,
the concurrence of a majority of the members of the Board of Directors of the Company) or to the
Company, or as may

- 36 -

 

be necessary or advisable in the administration of this Agreement, including, without limitation,
the right and power to (i) interpret the provisions of this Agreement, and (ii) make all
determinations deemed necessary or advisable for the administration of this Agreement (including a
determination to redeem or not redeem the Rights or to amend the Agreement). All such actions,
calculations, interpretations and determinations (including, for purposes of clause (y) below, all
omissions with respect to the foregoing) which are done or made by the Board (with, where
specifically provided for herein, the concurrence of a majority of the members of the Board of
Directors of the Company) in good faith, shall (x) be final, conclusive and binding on the Company,
the Rights Agent, the holders of the Rights and all other parties, and (y) not subject the Board to
any liability to the holders of the Rights.

Section 30. Benefits of this Agreement. Nothing in this Agreement shall be construed to
give to any Person other than the Company, the Rights Agent and the registered holders of the
Rights Certificates (and, prior to the Distribution Date, registered holders of the Common Stock)
any legal or equitable right, remedy or claim under this Agreement; but this Agreement shall be for
the sole and exclusive benefit of the Company, the Rights Agent and the registered holders of the
Rights Certificates (and, prior to the Distribution Date, registered holders of the Common Stock).

Section 31. Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction or other authority to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement
shall remain in full force and effect and shall in no way be affected, impaired or invalidated;
provided, however, that notwithstanding anything in this Agreement to the contrary, if any such
term, provision, covenant or restriction is held by such court or authority to be invalid, void or
unenforceable and the Board of Directors of the Company determines in its good faith judgment that
severing the invalid language from this Agreement would adversely affect the purpose or effect of
this Agreement, the right of redemption set forth in Section 23 hereof shall be reinstated and
shall not expire until the close of business on the twentieth day following the date of such
determination by the Board of Directors.

Section 32. Governing Law. This Agreement, each Right and each Rights Certificate issued
hereunder shall be deemed to be a contract made under the laws of the State of Delaware and for all
purposes shall be governed by and construed in accordance with the laws of such state applicable to
contracts made and to be performed entirely within such state.

Section 33. Counterparts. This Agreement may be executed in any number of counterparts
and each of such counterparts shall for all purposes be deemed to be an original, and all such
counterparts shall together constitute but one and the same instrument.

Section 34. Descriptive Headings. Descriptive headings of the several sections of this
Agreement are inserted for convenience only and shall not control or affect the meaning or
construction of any of the provisions hereof.

[SIGNATURE PAGE IMMEDIATELY FOLLOWS]

- 37- 

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and their
respective corporate seals to be hereunto affixed and attested, all as of the day and year first
above written.

	 	 	 	 	 	 	 	 	 
	Attest:	 	 	 	TOLL BROTHERS, INC.	 	 
	 
	 	 	 	 	 	 	 	 
	By:

	 	/s/ Michael J. Snyder
	 	By:
	 	/s/ Robert I. Toll	 	 
	 

	 	 
	 	 	 	 	 	 
	Name:

	 	Michael J. Snyder
	 	Name:
	 	Robert I. Toll	 	 
	Title:

	 	Sr. Vice President and Secretary
	 	Title:
	 	 Chairman and Chief Executive Officer	 	 
	 
	 	 	 	 	 	 	 	 
	Attest:	 	 	 	AMERICAN STOCK TRANSFER & TRUST COMPANY, LLC	 	 
	 
	 	 	 	 	 	 	 	 
	By:

	 	/s/ Susan Silber	 	By:	 	/s/ Herbert J. Lemmer	 	 
	 

	 	 
	 	 	 	 	 	 
	Name:

	 	Susan Silber	 	Name:	 	Herbert J. Lemmer	 	 
	Title:

	 	Assistant Secretary	 	Title:	 	Vice President	 	 

- 38 -

 

EXHIBIT A

Form of Designations, Preferences and Rights of Series B Junior Participating

Preferred Stock of Toll Brothers, Inc.

Section 1. Designation and Amount. The shares of such series shall be designated as
“Series B Junior Participating Preferred Stock” and the number of shares constituting such series
shall be 60,000.

Section 2. Dividends and Distributions.

	 	(a)	 	The holders of shares of Series B Junior Participating Preferred Stock shall be
entitled to receive, when, as and if declared by the Board of Directors out of funds
legally available for the purpose, quarterly dividends payable in cash on the last day of
March, June, September and December in each year (each such date being referred to herein
as a “Quarterly Dividend Payment Date”), commencing on the first Quarterly Dividend Payment
Date after the first issuance of a share or fraction of a share of Series B Junior
Participating Preferred Stock, in an amount per share (rounded to the nearest cent) equal
to the greater of (a) $0.01 or (b) subject to the provision for adjustment hereinafter set
forth, 10,000 times the aggregate per share amount of all cash dividends, and 10,000 times
the aggregate per share amount (payable in kind) of all non-cash dividends or other
distributions other than a dividend payable in shares of Common Stock or a subdivision of
the outstanding shares of Common Stock (by reclassification or otherwise), declared on the
Common Stock, par value $0.01 per share, of the Corporation (the “Common Stock”) since the
immediately preceding Quarterly Dividend Payment Date, or, with respect to the first
Quarterly Dividend Payment Date, since the first issuance of any share or fraction of a
share of Series B Junior Participating Preferred Stock. In the event the Corporation shall
at any time after June 17, 2009 (the “Rights Declaration Date”) (i) declare any dividend on
Common Stock payable in shares of Common Stock, (ii) subdivide the outstanding Common
Stock, or (iii) combine the outstanding Common Stock into a smaller number of shares, then
in each such case the amount to which holders of shares of Series B Junior Participating
Preferred Stock were entitled immediately prior to such event under clause (b) of the
preceding sentence shall be adjusted by multiplying such amount by a fraction the numerator
of which is the number of shares of Common Stock outstanding immediately after such event
and the denominator of which is the number of shares of Common Stock that were outstanding
immediately prior to such event.
	 
	 	(b)	 	The Corporation shall declare a dividend or distribution on the outstanding shares of
Series B Junior Participating Preferred Stock as provided in Paragraph (A) above
immediately after it declares a dividend or distribution on the Common Stock (other than a
dividend payable in shares of Common Stock); provided that, in the event no dividend or
distribution shall have been declared on the Common Stock during the period between any
Quarterly Dividend Payment Date and the next subsequent Quarterly Dividend Payment Date, a
dividend of $0.01 per share on the outstanding shares of Series B Junior Participating
Preferred Stock shall nevertheless be payable on such subsequent Quarterly Dividend Payment
Date.

- 1 -

 

	 	(c)	 	Dividends shall begin to accrue and be cumulative on outstanding shares of Series B
Junior Participating Preferred Stock from the Quarterly Dividend Payment Date next
preceding the date of issue of such shares of Series B Junior Participating Preferred
Stock, unless the date of issue of such shares is prior to the record date for the first
Quarterly Dividend Payment Date, in which case dividends on such shares shall begin to
accrue from the date of issue of such shares, or unless the date of issue is a Quarterly
Dividend Payment Date or is a date after the record date for the determination of holders
of shares of Series B Junior Participating Preferred Stock entitled to receive a quarterly
dividend and before such Quarterly Dividend Payment Date, in either of which events such
dividends shall begin to accrue and be cumulative from such Quarterly Dividend Payment
Date. Accrued but unpaid dividends shall not bear interest. Dividends paid on the shares
of Series B Junior Participating Preferred Stock in an amount less than the total amount of
such dividends at the time accrued and payable on such shares shall be allocated pro rata
on a share-by-share basis among all such shares at the time outstanding. The Board of
Directors may fix a record date for the determination of holders of shares of Series B
Junior Participating Preferred Stock entitled to receive payment of a dividend or
distribution declared thereon, which record date shall be no more than thirty (30) days
prior to the date fixed for the payment thereof.

Section 3. Voting Rights. The holders of shares of Series B Junior Participating
Preferred Stock shall have the following voting rights:

	 	(a)	 	Subject to the provision for adjustment hereinafter set forth, each share of Series B
Junior Participating Preferred Stock shall entitle the holder thereof to 10,000 votes on
all matters submitted to a vote of the stockholders of the Corporation. In the event the
Corporation shall at any time after the Rights Declaration Date (i) declare any dividend on
Common Stock payable in shares of Common Stock, (ii) subdivide the outstanding Common
Stock, or (iii) combine the outstanding Common Stock into a smaller number of shares, then
in each such case the number of votes per share to which holders of shares of Series B
Junior Participating Preferred Stock were entitled immediately prior to such event shall be
adjusted by multiplying such number by a fraction the numerator of which is the number of
 shares of Common Stock outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were outstanding immediately prior to
such event.
	 
	 	(b)	 	Except as otherwise provided herein or by law, the holders of shares of Series B Junior
Participating Preferred Stock and the holders of shares of Common Stock shall vote together
as one class on all matters submitted to a vote of stockholders of the Corporation.
	 
	 	(c)	 	(i) If at any time dividends on any Series B Junior Participating Preferred Stock shall
be in arrears in an amount equal to six (6) quarterly dividends thereon, the occurrence of
such contingency shall mark the beginning of a period (herein called a “default period”)
which shall extend until such time when all accrued and unpaid dividends for all previous
quarterly dividend periods and for the current quarterly dividend period on all shares of
Series B Junior Participating Preferred Stock then outstanding shall have been declared
and paid or set apart for payment. During each default period, all holders of Preferred
Stock

- 2 -

 

(including holders of the Series B Junior Participating Preferred Stock) with dividends in
arrears in an amount equal to six (6) quarterly dividends thereon, voting as a class,
irrespective of series, shall have the right to elect two (2) Directors.

(ii) During any default period, such voting right of the holders of Series B Junior
Participating Preferred Stock may be exercised initially at a special meeting called
pursuant to subparagraph (iii) of this Section 3(c) or at any annual meeting of
stockholders, and thereafter at annual meetings of stockholders, provided that such voting
right shall not be exercised unless the holders of ten percent (10%) in number of shares of
Preferred Stock outstanding shall be present in person or by proxy. The absence of a quorum
of the holders of Common Stock shall not affect the exercise by the holders of Preferred
Stock of such voting right. At any meeting at which the holders of Preferred Stock shall
exercise such voting right initially during an existing default period, they shall have the
right, voting as a class, to elect Directors to fill such vacancies, if any, in the Board of
Directors as may then exist up to two (2) Directors or, if such right is exercised at an
annual meeting, to elect two (2) Directors. If the number which may be so elected at any
special meeting does not amount to the required number, the holders of the Preferred Stock
shall have the right to make such increase in the number of Directors as shall be necessary
to permit the election by them of the required number. After the holders of the Preferred
Stock shall have exercised their right to elect Directors in any default period and during
the continuance of such period, the number of Directors shall not be increased or decreased
except by vote of the holders of Preferred Stock as herein provided or pursuant to the
rights of any equity securities ranking senior to or pari passu with the Series B Junior
Participating Preferred Stock.

(iii) Unless the holders of Preferred Stock shall, during an existing default period, have
previously exercised their right to elect Directors, the Board of Directors may order, or
any stockholder or stockholders owning in the aggregate not less than ten percent (10%) of
the total number of shares of Preferred Stock outstanding, irrespective of series, may
request, the calling of a special meeting of the holders of Preferred Stock, which meeting
shall thereupon be called by the President, a Vice-President or the Secretary of the
Corporation. Notice of such meeting and of any annual meeting at which holders of Preferred
Stock are entitled to vote pursuant to this Paragraph (c)(iii) shall be given to each holder
of record of Preferred Stock by mailing a copy of such notice to such holder at such
holder’s last address as the same appears on the books of the Corporation. Such meeting
shall be called for a time not earlier than twenty (20) days and not later than sixty (60)
days after such order or request, or in default of the calling of such meeting within sixty
(60) days after such order or request, such meeting may be called on similar notice by any
stockholder or stockholders owning in the aggregate not less than ten percent (10%) of the
total number of shares of Preferred Stock outstanding. Notwithstanding the provisions of
this Paragraph (c)(iii), no such special meeting shall be called during the period within
sixty (60) days immediately preceding the date fixed for the next annual meeting of the
stockholders.

(iv) In any default period, the holders of Common Stock, and other classes of stock of the
Corporation if applicable, shall continue to be entitled to elect the whole number of
Directors until the holders of Preferred Stock shall have exercised their right to elect two (2)

- 3 -

 

Directors voting as a class, after the exercise of which right (x) the Directors so elected
by the holders of Preferred Stock shall continue in office until their successors shall have
been elected by such holders or until the expiration of the default period, and (y) any
vacancy in the Board of Directors may (except as provided in Paragraph (c)(ii) of this
Section 3) be filled by vote of a majority of the remaining Directors theretofore elected by
the holders of the class of stock which elected the Director whose office shall have become
vacant. References in this Paragraph (c) to Directors elected by the holders of a
particular class of stock shall include Directors elected by such Directors to fill
vacancies as provided in clause (y) of the foregoing sentence.

(v) Immediately upon the expiration of a default period, (x) the right of the holders of
Preferred Stock as a class to elect Directors shall cease, (y) the term of any Directors
elected by the holders of Preferred Stock as a class shall terminate, and (z) the number of
Directors shall be such number as may be provided for in the certificate of incorporation or
by-laws of the Corporation irrespective of any increase made pursuant to the provisions of
Paragraph (c)(ii) of this Section 3 (such number being subject, however, to change
thereafter in any manner provided by law or in the certificate of incorporation or by-laws
of the Corporation). Any vacancies in the Board of Directors effected by the provisions of
clauses (y) and (z) in the preceding sentence may be filled by a majority of the remaining
Directors.

	 	(d)	 	Except as set forth herein, holders of Series B Junior Participating Preferred Stock
shall have no special voting rights and their consent shall not be required (except to the
extent they are entitled to vote with holders of Common Stock as set forth herein) for
taking any corporate action.

Section 4. Certain Restrictions.

	 	(a)	 	Whenever quarterly dividends or other dividends or distributions payable on the Series
B Junior Participating Preferred Stock as provided in Section 2 hereof are in arrears,
thereafter and until all accrued and unpaid dividends and distributions, whether or not
declared, on shares of Series B Junior Participating Preferred Stock outstanding shall have
been paid in full, the Corporation shall not:
	 
	 	 	 	(i) declare or pay dividends on, make any other distributions on, or redeem or purchase or
otherwise acquire for consideration any shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Series B Junior
Participating Preferred Stock;
	 
	 	 	 	(ii) declare or pay dividends on or make any other distributions on any shares of stock
ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up)
with the Series B Junior Participating Preferred Stock, except dividends paid ratably on the
Series B Junior Participating Preferred Stock and all such parity stock on which dividends
are payable or in arrears in proportion to the total amounts to which the holders of all
such shares are then entitled;
	 
	 	 	 	(iii) redeem or purchase or otherwise acquire for consideration shares of any stock ranking
on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the

- 4 -

 

	 	 	 	Series B Junior Participating Preferred Stock, provided that the Corporation may at any time
redeem, purchase or otherwise acquire shares of any such parity stock in exchange for shares
of any stock of the Corporation ranking junior (either as to dividends or upon dissolution,
liquidation or winding up) to the Series B Junior Participating
Preferred Stock; or
	 
	 	 	 	(iv) purchase or otherwise acquire for consideration any shares of Series B Junior
Participating Preferred Stock, or any shares of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the Series B Junior
Participating Preferred Stock, except in accordance with a purchase offer made in writing or
by publication (as determined by the Board of Directors) to all holders of such shares upon
such terms as the Board of Directors, after consideration of the respective annual dividend
rates and other relative rights and preferences of the respective series and classes, shall
determine in good faith will result in fair and equitable treatment among the respective
series or classes.
	 
	 	(b)	 	The Corporation shall not permit any subsidiary of the Corporation to purchase or
otherwise acquire for consideration any shares of stock of the Corporation unless the
Corporation could, under Paragraph (a) of this Section 4, purchase or otherwise acquire
such shares at such time and in such manner.

Section 5. Reacquired Shares. Any shares of Series B Junior Participating Preferred Stock
purchased or otherwise acquired by the Corporation in any manner whatsoever shall be retired and
canceled promptly after the acquisition thereof. All such shares shall upon their cancellation
become authorized but unissued shares of Preferred Stock and may be reissued as part of a new
series of Preferred Stock to be created by resolution or resolutions of the Board of Directors,
subject to the conditions and restrictions on issuance set forth herein.

Section 6. Liquidation, Dissolution or Winding Up.

	 	(a)	 	Upon any liquidation (voluntary or otherwise), dissolution or winding up of the
Corporation, no distribution shall be made to the holders of shares of stock ranking junior
(either as to dividends or upon liquidation, dissolution or winding up) to the Series B
Junior Participating Preferred Stock unless, prior thereto, the holders of shares of Series
B Junior Participating Preferred Stock shall have received an amount equal to $100,000 per
share of Series B Junior Participating Preferred Stock, plus an amount equal to accrued and
unpaid dividends and distributions thereon, whether or not declared, to the date of such
payment (the “Series B Liquidation Preference”). Following the payment of the full amount
of the Series B Liquidation Preference, no additional distributions shall be made to the
holders of shares of Series B Junior Participating Preferred Stock unless, prior thereto,
the holders of shares of Common Stock shall have received an amount per share (the “Common
Adjustment”) equal to the quotient obtained by dividing (i) the Series B Liquidation
Preference by (ii) 10,000 (as appropriately adjusted as set forth in subparagraph (c) below
to reflect such events as stock splits, stock dividends and recapitalizations with respect
to the Common Stock) (such number in clause (ii), the “Adjustment Number”). Following the
payment of the full amount of the Series B Liquidation Preference and the Common Adjustment
in respect of all outstanding shares of Series B Junior Participating Preferred

- 5 -

 

	 	 	 	Stock and Common Stock, respectively, holders of Series B Junior Participating Preferred
Stock and holders of shares of Common Stock shall receive their ratable and proportionate
share of the remaining assets to be distributed in the ratio of the Adjustment Number to 1
with respect to such Preferred Stock and Common Stock, on a per share basis, respectively.
	 
	 	(b)	 	In the event, however, that there are not sufficient assets available to permit payment
in full of the Series B Liquidation Preference and the liquidation preferences of all other
series of Preferred Stock, if any, which rank on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series B Junior Participating Preferred
Stock, then such remaining assets shall be distributed ratably to the holders of such
parity shares in proportion to their respective liquidation preferences. In the event,
however, that there are not sufficient assets available to permit payment in full of the
Common Adjustment, then such remaining assets shall be distributed ratably to the holders
of Common Stock.
	 
	 	(c)	 	In the event the Corporation shall at any time after the Rights Declaration Date (i)
declare any dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the
outstanding Common Stock, or (iii) combine the outstanding Common Stock into a smaller
number of shares, then in each such case the Adjustment Number in effect immediately prior
to such event shall be adjusted by multiplying such Adjustment Number by a fraction the
numerator of which is the number of shares of Common Stock outstanding immediately after
such event and the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.

Section 7. Consolidation, Merger, etc. In case the Corporation shall enter into any
consolidation, merger, combination or other transaction in which the shares of Common Stock are
exchanged for or changed into other stock or securities, cash and/or any other property, then in
any such case the shares of Series B Junior Participating Preferred Stock shall at the same time be
similarly exchanged or changed in an amount per share (subject to the provision for adjustment
hereinafter set forth) equal to 10,000 times the aggregate amount of stock, securities, cash and/or
any other property (payable in kind), as the case may be, into which or for which each share of
Common Stock is changed or exchanged. In the event the Corporation shall at any time after the
Rights Declaration Date (i) declare any dividend on Common Stock payable in shares of Common Stock,
(ii) subdivide the outstanding Common Stock, or (iii) combine the outstanding Common Stock into a
smaller number of shares, then in each such case the amount set forth in the preceding sentence
with respect to the exchange or change of shares of Series B Junior Participating Preferred Stock
shall be adjusted by multiplying such amount by a fraction the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to such event.

Section 8. No Redemption. The shares of Series B Junior Participating Preferred Stock
shall not be redeemable.

Section 9. Amendment. The certificate of incorporation of the Corporation shall not be
further amended in any manner which would materially alter or change the powers, preferences or
special rights of the Series B Junior Participating Preferred Stock so as to affect them adversely
without the affirmative vote of the holders of a majority or more of the outstanding shares of
Series B Junior Participating Preferred Stock, voting separately as a class.

- 6 -

 

Section 10. Fractional Shares. Series B Junior Participating Preferred Stock may be
issued in fractions of a share which shall entitle the holder, in proportion to such holder’s
fractional shares, to exercise voting rights, receive dividends, participate in distributions and
to have the benefit of all other rights of holders of Series B Junior Participating Preferred
Stock.

- 7 -

 

Exhibit B

[Form of Rights Certificate]

	 	 	 	 	 
	Certificate No. R-
	 	Rights
	 	 

NOT EXERCISABLE AFTER JULY 16, 2019 OR EARLIER IF REDEEMED BY THE COMPANY. THE RIGHTS ARE SUBJECT
TO REDEMPTION, AT THE OPTION OF THE COMPANY, AT $0.001 PER RIGHT ON THE TERMS SET FORTH IN THE
RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON
(AS SUCH TERM IS DEFINED IN THE RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY
BECOME NULL AND VOID. [THE RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE ARE OR WERE BENEFICIALLY
OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF AN
ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT). ACCORDINGLY, THIS RIGHTS
CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY BECOME NULL AND VOID IN THE CIRCUMSTANCES
SPECIFIED IN SECTION 7(e) OF SUCH AGREEMENT.]

Rights Certificate

TOLL BROTHERS, INC.

This certifies that [          ], or registered assigns, is the registered owner of
the number of Rights set forth above, each of which entitles the owner thereof, subject to the
terms, provisions and conditions of the Rights Agreement, dated as of June 17, 2009 (the “Rights
Agreement”), between Toll Brothers, Inc., a Delaware corporation (the “Company”), and American
Stock Transfer & Trust Company, LLC, a New York limited liability company (the “Rights Agent”), to
purchase from the Company at any time prior to 5:00 P.M. (New York City time) on July 16, 2019 at
the office or offices of the Rights Agent designated for such purpose, or its successors as Rights
Agent, one ten- thousandth of a fully paid, non-assessable share of Series B Junior Participating
Preferred Stock (the “Preferred Stock”) of the Company, at a purchase price of $100.00 per one
ten-thousandth of a share (the “Purchase Price”), upon presentation and surrender of this Rights
Certificate with the Form of Election to Purchase and related Certificate duly executed. The
number of Rights evidenced by this Rights Certificate (and the number of shares which may be
purchased upon exercise thereof) set forth above, and the Purchase Price per share set forth above,
are the number and Purchase Price as of June 17, 2009 based on the Preferred Stock as constituted
at such date. The Company reserves the right to require prior to the occurrence of a Triggering
Event (as such term is defined in the Rights Agreement) that a number of Rights be exercised so
that only whole shares of Preferred Stock will be issued.

Upon the occurrence of a Section 11(a)(ii) Event (as such term is defined in the Rights Agreement),
if the Rights evidenced by this Rights Certificate are beneficially owned by (i) an Acquiring
Person or an Affiliate or Associate of any such Acquiring Person (as such terms are defined in the
Rights Agreement), (ii) a transferee of any such Acquiring Person, Associate or Affiliate, or (iii)
under certain circumstances specified in the Rights Agreement, a transferee of a person who, after
such transfer, became an Acquiring Person, or an Affiliate or Associate of an Acquiring Person,
such Rights shall become null and void and no holder hereof shall have any right with respect to
such Rights from and after the occurrence of such Section 11(a)(ii) Event.

- 1 -

 

As provided in the Rights Agreement, the Purchase Price and the number and kind of shares of
Preferred Stock or other securities, which may be purchased upon the exercise of the Rights
evidenced by this Rights Certificate are subject to modification and adjustment upon the happening
of certain events, including Triggering Events.

This Rights Certificate is subject to all of the terms, provisions and conditions of the Rights
Agreement, which terms, provisions and conditions are hereby incorporated herein by reference and
made a part hereof and to which Rights Agreement reference is hereby made for a full description of
the rights, limitations of rights, obligations, duties and immunities hereunder of the Rights
Agent, the Company and the holders of the Rights Certificates, which limitations of rights include
the temporary suspension of the exercisability of such Rights under the specific circumstances set
forth in the Rights Agreement. Copies of the Rights Agreement are on file at the above-mentioned
office of the Rights Agent and are also available upon written request to the Rights Agent.

This Rights Certificate, with or without other Rights Certificates, upon surrender at the principal
office or offices of the Rights Agent designated for such purpose, may be exchanged for another
Rights Certificate or Rights Certificates of like tenor and date evidencing Rights entitling the
holder to purchase a like aggregate number of one ten-thousandths of a share of Preferred Stock as
the Rights evidenced by the Rights Certificate or Rights Certificates surrendered shall have
entitled such holder to purchase. If this Rights Certificate shall be exercised in part, the
holder shall be entitled to receive upon surrender hereof another Rights Certificate or Rights
Certificates for the number of whole Rights not exercised.

Subject to the provisions of the Rights Agreement, the Rights evidenced by this Certificate may be
redeemed by the Company at its option at a redemption price of $0.001 per Right at any time prior
to the earlier of the close of business on (i) the tenth day following the Stock Acquisition Date
(as such time period may be extended pursuant to the Rights Agreement), and (ii) the Final
Expiration Date. In addition, the Rights may be exchanged, in whole or in part, for shares of the
Common Stock, or shares of preferred stock of the Company having essentially the same value or
economic rights as such shares. Immediately upon the action of the Board of Directors of the
Company authorizing any such exchange, and without any further action or any notice, the Rights
(other than Rights which are not subject to such exchange) will terminate and the Rights will only
enable holders to receive the shares issuable upon such exchange. Under certain circumstances set
forth in the Rights Agreement, the decision to redeem the Rights shall require the concurrence of a
majority of the members of the Board of Directors of the Company.

No fractional shares of Preferred Stock will be issued upon the exercise of any Right or Rights
evidenced hereby (other than fractions which are integral multiples of one ten-thousandth of a
share of Preferred Stock, which may, at the election of the Company, be evidenced by depositary
receipts), but in lieu thereof a cash payment will be made, as provided in the Rights Agreement.

No holder of this Rights Certificate shall be entitled to vote or receive dividends or be deemed
for any purpose the holder of shares of Preferred Stock or of any other securities of the Company
which may at any time be issuable on the exercise hereof, nor shall anything contained in the
Rights Agreement or herein be construed to confer upon the holder hereof, as such, any of the
rights of a stockholder of the Company or any right to vote for the election of directors or upon
any matter submitted to stockholders at any meeting thereof, or to give consent to or withhold
consent from any corporate action, or, to receive notice of meetings or other actions affecting

stockholders

- 2 -

 

(except as provided in the Rights Agreement), or to receive dividends or subscription rights, or
otherwise, until the Right or Rights evidenced by this Rights Certificate shall have been exercised
as provided in the Rights Agreement.

This Rights Certificate shall not be valid or obligatory for any purpose until it shall have been
countersigned by the Rights Agent.

WITNESS the facsimile signature of the proper officers of the Company and its corporate seal.

Dated as of                     .

	 	 	 	 	 	 	 
	Attest:

	 	 	 	TOLL BROTHERS, INC.
	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	By: Secretary

	 	 	 	By:	 	 
	Name:

	 	 	 	Name:	 	 
	Title:

	 	 	 	Title:	 	 
	 
	 	 	 	 	 	 
	Countersigned:
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	Attest:

	 	 	 	AMERICAN STOCK TRANSFER & TRUST COMPANY, LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	By:

	 	 	 	By: Authorized Signature	 	 
	Name:
	 	 	 	 	 	 
	Title:
	 	 	 	 	 	 

- 3 -

 

[Form of Reverse Side of Rights Certificate]

FORM OF ASSIGNMENT

(To be executed by the registered holder if such holder desires to transfer the Rights Certificate.)

FOR VALUE RECEIVED                      hereby sells, assigns and transfers unto                     (Please
print name and address of transferee) this Rights Certificate, together with all right, title and
interest therein, and does hereby irrevocably constitute and appoint Attorney, to
transfer the within Rights Certificate on the books of the within-named Company, with full power of
substitution.

Dated:                     

Signature:                                         

Signature Guaranteed:

Certificate

The undersigned hereby certifies by checking the appropriate boxes that:

	 	(1)	 	this Rights Certificate [  ] is [  ] is not being sold, assigned and transferred by or
on behalf of a Person who is or was an Acquiring Person or an Affiliate or Associate of any
such Acquiring Person (as such terms are defined pursuant to the Rights Agreement);
	 
	 	(2)	 	after due inquiry and to the best knowledge of the undersigned, it [    ] did [   ] did
not acquire the Rights evidenced by this Rights Certificate from any Person who is, was or
subsequently became an Acquiring Person or an Affiliate or Associate of an Acquiring
Person.

Dated:                     

Signature:                                         

Signature Guaranteed:

NOTICE

The signature to the foregoing Assignment and Certificate must correspond to the name as written
upon the face of this Rights Certificate in every particular, without alteration or enlargement or
any change whatsoever.

- 1 -

 

FORM OF ELECTION TO PURCHASE

(To be executed if holder desires to exercise Rights represented by the Rights Certificate.)

To:         TOLL BROTHERS, INC.:

The undersigned hereby irrevocably elects to exercise                      Rights represented by this Rights
Certificate to purchase the shares of Preferred Stock issuable upon the exercise of the Rights (or
such other securities of the Company or of any other person which may be issuable upon the exercise
of the Rights) and requests that certificates for such shares be issued in the name of and
delivered to:

Please insert social security

or other identifying number                                         

	 	 	 	 	 	 	 
	 

	 	(Please print name and address):	 	 	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	 

If such number of Rights shall not be all the Rights evidenced by this Rights Certificate, a new
Rights Certificate for the balance of such Rights shall be registered in the name of and delivered
to:

Please insert social security

or other identifying number

	 	 	 	 	 	 	 	 	 
	 

	 	(Please print name and address):	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	Dated:	 	 	 	 
	 

	 	 	 	 	 	 

	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	Signature:	 	 	 	 
	 

	 	 	 	 	 	 	 	 

Signature Guaranteed:

     Certificate

The undersigned hereby certifies by checking the appropriate boxes that:

	 	(1)	 	the Rights evidenced by this Rights Certificate

[   ] are [    ] are not being exercised by or on behalf of a Person who is or was an Acquiring Person
or an Affiliate or Associate of any such Acquiring Person (as such terms are defined pursuant to
the Rights Agreement);

	 	(2)	 	after due inquiry and to the best knowledge of the undersigned, it [   ] did [    ] did
not acquire the Rights evidenced by this Rights Certificate from any Person who is, was or
became an Acquiring Person or an Affiliate or Associate of an Acquiring Person.

Dated:                    

Signature:                                        

Signature Guaranteed:

- 2 -

 

     NOTICE

The signature to the foregoing Election to Purchase and Certificate must correspond to the name as
written upon the face of this Rights Certificate in every particular, without alteration or
enlargement or any change whatsoever.

- 3 -

 

Exhibit C

SUMMARY OF RIGHTS TO PURCHASE SERIES A JUNIOR PARTICIPATING PREFERRED STOCK

          On June 17, 2009, the Board of Directors of Toll Brothers, Inc. (the “Company”) approved the
execution of a Section 382 Rights Agreement (the “Rights Agreement”) between the Company and
American Stock Transfer & Trust Company, LLC (the “Rights Agent”). The Rights Agreement provides
for a distribution of one preferred stock purchase right (a “Right”) for each share of Common
Stock, par value $0.01 per share, of the Company (the “Common Stock”) outstanding to stockholders
of record at the close of business on July 17, 2009 (the “Record Date”). Each Right entitles the
registered holder to purchase from the Company a unit (a “Unit”) consisting of one ten-thousandth
of a share of Series B Junior Participating Preferred Stock, par value $0.01 per share (the
“Preferred Stock”), at a Purchase Price of $100.00 per Unit (the “Purchase Price”), subject to
adjustment. The description and terms of the Rights are set forth in the Rights Agreement.

          The Board of Directors of the Company adopted the Rights Agreement in an effort to protect
stockholder value by attempting to protect against a possible limitation on the Company’s ability
to use its net operating loss carryforwards (the “NOLs”) to reduce potential future federal income
tax obligations. The Company has experienced and continues to experience substantial operating
losses, and under the Internal Revenue Code of 1986, as amended (the “Code”), and rules promulgated
by the Internal Revenue Service, the Company may “carry forward” these losses in certain
circumstances to offset any current and future earnings and thus reduce the Company’s federal
income tax liability, subject to certain requirements and restrictions. To the extent that the NOLs
do not otherwise become limited, the Company believes that it will be able to carry forward a
significant amount of NOLs, and therefore these NOLs could be a substantial asset to the Company.
However, if the Company experiences an “Ownership Change,” as defined in Section 382 of the Code,
its ability to use the NOLs will be substantially limited, and the timing of the usage of the NOLs
could be substantially delayed, which could therefore significantly impair the value of that asset.

          Initially, the Rights will be attached to all Common Stock certificates representing shares
then outstanding, and no separate Rights Certificates will be distributed. Subject to certain
exceptions specified in the Rights Agreement, the Rights will separate from the Common Stock and a
Distribution Date will occur upon the earlier of (i) ten (10) days following a public announcement
that a person or group of affiliated or associated persons (an “Acquiring Person”) has acquired, or
obtained the right to acquire, beneficial ownership of 4.95% or more of the outstanding shares of
Common Stock (the “Stock Acquisition Date”) or (ii) ten (10) business days following the
commencement of a tender offer or exchange offer that would result in a person or group
beneficially owning 4.95% or more of the outstanding shares of Common Stock. The definition of
Acquiring Person excludes any Exempted Person (as defined below). Until the Distribution Date, (i)
the Rights will be evidenced by the Common Stock certificates and will be transferred with and only
with such Common Stock certificates, (ii) new Common Stock certificates after the Record Date will
contain a notation incorporating the Rights Agreement by reference and (iii) the surrender for
transfer of any certificates for Common Stock outstanding will also constitute the transfer of the
Rights associated with the Common Stock represented by such certificate.

- 1 -

 

          Any person who, together with all affiliates and associates of such person, is the beneficial
owner of Common Stock, options and/or warrants exercisable for shares of Common Stock representing
4.95% or more of the shares of Common Stock outstanding on June 17, 2009, will be an “Exempted
Person.” However, any such person will no longer be deemed to be an Exempted Person and shall be
deemed an Acquiring Person if such person, together with all affiliates and associates of such
person, becomes the beneficial owner (and so long as such person continues to be the beneficial
owner of 4.95% or more of the then outstanding shares of Common Stock), of additional securities
representing 1,000 or more shares of Common Stock, except (x) pursuant to equity compensation
awards granted to such person by the Company or options or warrants outstanding and beneficially
owned by such person as of June 17, 2009, or as a result of an adjustment to the number of shares
of Common Stock represented by such equity compensation award pursuant to the terms thereof or (y)
as a result of a stock split, stock dividend or the like. In addition, any person who, together
with all affiliates and associates of such person, becomes the beneficial owner of Common Stock,
options and/or warrants exercisable for shares of Common Stock representing 4.95% or more of the
shares of Common Stock then outstanding as a result of a purchase by the Company or any of its
subsidiaries of shares of Common Stock will also be an “Exempted Person.” However, any such person
will no longer be deemed to be an Exempted Person and will be deemed to be an Acquiring Person if
such person, together with all affiliates and associates of such person, becomes the beneficial
owner, at any time after the date such person became the beneficial owner of 4.95% or more of the
then outstanding shares of Common Stock, of additional securities representing 1,000 or more shares
of Common Stock, except if such additional securities are acquired (x) pursuant to the exercise of
options or warrants to purchase Common Stock outstanding and beneficially owned by such person as
of the date such person became the beneficial owner of 4.95% or more of the then outstanding shares
of Common Stock or as a result of an adjustment to the number of shares of Common Stock for which
such options or warrants are exercisable pursuant to the terms thereof, or (y) as a result of a
stock split, stock dividend or the like. In addition, any person who, together with all affiliates
and associates of such person, is the beneficial owner of Common Stock, options and/or warrants
exercisable for shares of Common Stock representing 4.95% or more of the shares of Common Stock
outstanding, and whose beneficial ownership would not, as determined by the Board of Directors of
the Company in its sole discretion, jeopardize or endanger the availability of the Company of its
NOLs, will be an “Exempted Person.” However, any such person will cease to be an Exempted Person
if (x) such person ceases to beneficially own 4.95% or more of the shares of the then outstanding
Common Stock or (y) the Board of Directors of the Company, in its sole discretion, makes a contrary
determination with respect to the effect of such person’s beneficial ownership (together with all
affiliates and associates of such person) with respect to the availability to the Company of its
NOLs. A purchaser, assignee or transferee of the shares of Common Stock (or options or warrants
exercisable for Common Stock) from an Exempted Person will not thereby become an Exempted Person,
except that a transferee from the estate of an Exempted Person who receives Common Stock as a
bequest or inheritance from an Exempted Person shall be an Exempted Person so long as such
transferee continues to be the beneficial owner of 4.95% or more of the then outstanding shares of
Common Stock.

     The Rights are not exercisable until the Distribution Date and will expire on the earliest of
(i) the close of business on July 16, 2019, (ii) the time at which the Rights are redeemed pursuant
to the Rights Agreement, (iii) the time at which the Rights are exchanged pursuant to the Rights
Agreement, (iv) the repeal of Section 382 of the Code or any successor statute if the Board of

- 2 -

 

Directors of the Company determines that the Rights Agreement is no longer necessary or
desirable for the preservation of certain tax benefits, (v) the beginning of a taxable year of the
Company to which the Board of Directors of the Company determines that certain tax benefits may not
be carried forward, or (vi) the first anniversary of adoption of the Rights Agreement if
shareholder approval of the Rights Agreement has not been received by or on such date. At no time
will the Rights have any voting power.

          As soon as practicable after the Distribution Date, Rights Certificates will be mailed to
holders of record of the Common Stock as of the close of business on the Distribution Date.
Thereafter, the separate Rights Certificates alone will represent the Rights. Except as otherwise
determined by the Board of Directors, only shares of Common Stock issued prior to the Distribution
Date will be issued with Rights.

          In the event that an Acquiring Person becomes the beneficial owner of 4.95% or more of the
then outstanding shares of Common Stock, each holder of a Right will thereafter have the right to
receive, upon exercise, Common Stock (or, in certain circumstances, cash, property or other
securities of the Company), having a value equal to two times the exercise price of the Right. The
exercise price is the Purchase Price times the number of Units associated with each Right
(initially, one). Notwithstanding any of the foregoing, following the occurrence of an Acquiring
Person becoming such (the “Flip-In Event”), all Rights that are, or (under certain circumstances
specified in the Rights Agreement) were, beneficially owned by any Acquiring Person will be null
and void. However, Rights are not exercisable following the occurrence of a Flip-In Event until
such time as the Rights are no longer redeemable by the Company as set forth below.

          For example, at an exercise price of $100.00 per Right, each Right not owned by an Acquiring
Person (or by certain related parties) following an event set forth in the preceding paragraph
would entitle its holder to purchase $200.00 worth of Common Stock (or other consideration, as
noted above) for $100.00. If the Common Stock at the time of exercise had a market value per share
of $20.00, the holder of each valid Right would be entitled to purchase ten (10) shares of Common
Stock for $100.00.

          In the event that, at any time following the Stock Acquisition Date, (i) the Company engages
in a merger or other business combination transaction in which the Company is not the surviving
corporation; (ii) the Company engages in a merger or other business combination transaction in
which the Company is the surviving corporation and the Common Stock is changed or exchanged; or
(iii) 50% or more of the Company’s assets, cash flow or earning power is sold or transferred, each
holder of a Right (except Rights which have previously been voided as set forth above) shall
thereafter have the right to receive, upon exercise of the Right, common stock of the acquiring
company having a value equal to two times the exercise price of the Right. The events set forth in
this paragraph and in the second preceding paragraph are referred to as the “Triggering Events.”

          The Purchase Price payable, and the number of Units of Preferred Stock or other securities or
property issuable, upon exercise of the Rights are subject to adjustment from time to time to
prevent dilution (i) in the event of a stock dividend on, or a subdivision, combination or
reclassification of, the Preferred Stock, (ii) if holders of the Preferred Stock are granted
certain rights or warrants to subscribe for Preferred Stock or convertible securities at less than
the current

- 3 -

 

market price of the Preferred Stock, or (iii) upon the distribution to holders of the
Preferred Stock of evidences of indebtedness or assets (excluding regular quarterly cash dividends)
or of subscription rights or warrants (other than those referred to above).

          With certain exceptions, no adjustments in the Purchase Price will be required until
cumulative adjustments amount to at least 1% of the Purchase Price. No fractional Units will be
issued and, in lieu thereof, an adjustment in cash will be made based on the market price of the
Preferred Stock on the last trading date prior to the date of exercise.

          At any time after the Stock Acquisition Date, the Board of Directors of the Company may
exchange the Rights (other than Rights owned by an Acquiring Person), in whole or in part, at an
exchange ratio equal to (i) a number of shares of Common Stock per Right with a value equal to the
spread between the value of the number of shares of Common Stock for which the Rights may then be
exercised and the Purchase Price or (ii) if prior to the acquisition by the Acquiring Person of 50%
or more of the then outstanding shares of Common Stock, one share of Common Stock per Right
(subject to adjustment).

          At any time until ten (10) days following the Stock Acquisition Date, the Company may redeem
the Rights in whole, but not in part, at a price of $0.001 per Right. Immediately upon the action
of the Board of Directors ordering redemption of the Rights, the Rights will terminate and the only
right of the holders of Rights will be to receive the $0.001 redemption price.

          Until a Right is exercised, the holder thereof, as such, will have no rights as a shareholder
of the Company, including, without limitation, the right to vote or to receive dividends. While the
distribution of the Rights will not be taxable to shareholders or to the Company, shareholders may,
depending upon the circumstances, recognize taxable income in the event that the Rights become
exercisable for Common Stock (or other consideration) of the Company as set forth above or in the
event the Rights are redeemed.

          Other than those provisions relating to the principal economic terms of the Rights, any of the
provisions of the Rights Agreement may be amended by the Board of Directors of the Company prior to
the Distribution Date. After the Distribution Date, the provisions of the Rights Agreement may be
amended by the Board in order to cure any ambiguity, to make changes which do not adversely affect
the interests of holders of Rights (excluding the interests of any Acquiring Person), or to shorten
or lengthen any time period under the Rights Agreement; provided, however, that no amendment to
adjust the time period governing redemption shall be made at such time as the Rights are not
redeemable.

          A copy of the Rights Agreement is being filed with the Securities and Exchange Commission as
an Exhibit to a Registration Statement on Form 8-A. A copy of the Rights Agreement is available
free of charge from the Company.

          This Summary of Rights does not purport to be complete and is qualified in its entirety by
reference to the Rights Agreement, which is incorporated herein by reference.

- 4 -exv4w1

EXHIBIT 4.1

PS BUSINESS PARKS, INC.

and

 

Trustee

INDENTURE

Dated as of                     

SENIOR DEBT SECURITIES

 

 

CROSS-REFERENCE TABLE(1)

	 	 	 
	Section of	 	 
	Trust Indenture Act	 	Section of
	of 1939, as amended	 	Indenture
	310(a)
	 	6.09
	310(b)
	 	6.08
	 
	 	6.10
	310(c)
	 	Inapplicable
	311(a)
	 	6.13
	311(b)
	 	6.13
	311(c)
	 	Inapplicable
	312(a)
	 	4.01
	 
	 	4.04
	312(b)
	 	4.04(c)
	312(c)
	 	4.04(c)
	313(a)
	 	4.03
	313(b)
	 	4.03
	313(c)
	 	4.03
	313(d)
	 	4.03
	314(a)
	 	4.02
	314(b)
	 	Inapplicable
	314(c)
	 	2.04
	 
	 	8.04
	 
	 	9.01(c)
	 
	 	10.01(b)
	 
	 	11.05
	314(d)
	 	Inapplicable
	314(e)
	 	11.05
	314(f)
	 	Inapplicable
	315(a)
	 	6.01
	 
	 	6.02
	315(b)
	 	5.11
	315(c)
	 	6.01
	315(d)
	 	6.01
	 
	 	6.02
	315(e)
	 	5.12
	316(a)
	 	5.09
	 
	 	5.10
	 
	 	7.04
	316(b)
	 	5.06
	 
	 	5.10
	316(c)
	 	7.02
	317(a)
	 	5.04
	317(b)
	 	3.04
	318(a)
	 	11.07

 

			
	(1)	 	This Cross-Reference Table does not constitute part of the Indenture and shall not have any
bearing on the interpretation of any of its terms or provisions.

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	PAGE	 
	ARTICLE 1 DEFINITIONS
	 	 	1	 
	Section 1.01 Certain Terms Defined
	 	 	1	 
	 
	 	 	 	 
	ARTICLE 2 SECURITIES
	 	 	5	 
	Section 2.01 Forms Generally
	 	 	5	 
	Section 2.02 Form of Trustee’s Certificate of Authentication
	 	 	5	 
	Section 2.03 Amount Unlimited; Issuable in Series
	 	 	6	 
	Section 2.04 Authentication and Delivery of Securities
	 	 	8	 
	Section 2.05 Execution of Securities
	 	 	9	 
	Section 2.06 Certificate of Authentication
	 	 	10	 
	Section 2.07 Denomination and Date of Securities; Payments of Interest
	 	 	10	 
	Section 2.08 Registration, Transfer and Exchange
	 	 	10	 
	Section 2.09 Mutilated, Defaced, Destroyed, Lost and Stolen Securities
	 	 	13	 
	Section 2.10 Cancellation of Securities; Destruction Thereof
	 	 	14	 
	Section 2.11 Temporary Securities
	 	 	14	 
	 
	 	 	 	 
	ARTICLE 3 COVENANTS OF THE ISSUER
	 	 	14	 
	Section 3.01 Payment of Principal and Interest
	 	 	14	 
	Section 3.02 Offices for Payments, Etc.
	 	 	14	 
	Section 3.03 Appointment to Fill a Vacancy in Office of Trustee
	 	 	15	 
	Section 3.04 Paying Agents
	 	 	15	 
	Section 3.05 Written Statement to Trustee
	 	 	16	 
	 
	 	 	 	 
	ARTICLE 4 SECURITYHOLDERS LISTS AND REPORTS BY THE ISSUER AND THE TRUSTEE
	 	 	16	 
	Section 4.01 Issuer to Furnish Trustee Information as to Names and Addresses of
Securityholders
	 	 	16	 
	Section 4.02 Reports by the Issuer
	 	 	17	 
	Section 4.03 Reports by the Trustee
	 	 	17	 
	Section 4.04 Preservation of Information; Communication with Securityholders
	 	 	17	 
	 
	 	 	 	 
	ARTICLE 5 REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS ON EVENT OF DEFAULT
	 	 	17	 
	Section 5.01 Event of Default Defined; Acceleration of Maturity; Waiver of Default
	 	 	17	 
	Section 5.02 Collection of Debt by Trustee; Trustee May Prove Debt
	 	 	19	 
	Section 5.03 Application of Proceeds
	 	 	21	 
	Section 5.04 Suits for Enforcement
	 	 	22	 
	Section 5.05 Restoration of Rights on Abandonment of Proceedings
	 	 	22	 
	Section 5.06 Limitations on Suits by Securityholders
	 	 	22	 
	Section 5.07 Unconditional Right of Securityholders to Institute Certain Suits
	 	 	23	 

i 

 

	 	 	 	 	 
	 	 	PAGE	 
	Section 5.08 Powers and Remedies Cumulative; Delay or Omission Not Waiver of
Default
	 	 	23	 
	Section 5.09 Control by Holders of Securities
	 	 	23	 
	Section 5.10 Waiver of Past Defaults
	 	 	24	 
	Section 5.11 Trustee to Give Notice of Default
	 	 	24	 
	Section 5.12 Right of Court to Require Filing of Undertaking to Pay Costs
	 	 	25	 
	 
	 	 	 	 
	ARTICLE 6 CONCERNING THE TRUSTEE
	 	 	25	 
	Section 6.01 Duties and Responsibilities of the Trustee; During Default; Prior to
Default
	 	 	25	 
	Section 6.02 Certain Rights of the Trustee
	 	 	25	 
	Section 6.03 Trustee Not Responsible for Recitals, Disposition of Securities or
Application of Proceeds Thereof
	 	 	27	 
	Section 6.04 Trustee and Agents May Hold Securities; Collections, Etc.
	 	 	27	 
	Section 6.05 Moneys Held by Trustee
	 	 	27	 
	Section 6.06 Compensation and Indemnification of Trustee and Its Prior Claim
	 	 	27	 
	Section 6.07 Right of Trustee to Rely on Officer’s Certificate, Etc.
	 	 	28	 
	Section 6.08 Disqualification; Conflicting Interests
	 	 	28	 
	Section 6.09 Persons Eligible for Appointment as Trustee
	 	 	28	 
	Section 6.10 Resignation and Removal; Appointment of Successor Trustee
	 	 	28	 
	Section 6.11 Acceptance of Appointment by Successor Trustee
	 	 	30	 
	Section 6.12 Merger, Conversion, Consolidation or Succession to Business of Trustee
	 	 	30	 
	Section 6.13 Preferential Collection of Claims Against the Issuer
	 	 	31	 
	 
	 	 	 	 
	ARTICLE 7 CONCERNING THE SECURITYHOLDERS
	 	 	31	 
	Section 7.01 Evidence of Action Taken by Securityholders
	 	 	31	 
	Section 7.02 Proof of Execution of Instruments and of Holding of Securities
	 	 	31	 
	Section 7.03 Holders to Be Treated as Owners
	 	 	32	 
	Section 7.04 Securities Owned by Issuer Deemed Not Outstanding
	 	 	32	 
	Section 7.05 Right of Revocation of Action Taken
	 	 	32	 
	 
	 	 	 	 
	ARTICLE 8 SUPPLEMENTAL INDENTURES
	 	 	33	 
	Section 8.01 Supplemental Indentures Without Consent of Securityholders
	 	 	33	 
	Section 8.02 Supplemental Indentures With Consent of Securityholders
	 	 	34	 
	Section 8.03 Effect of Supplemental Indenture
	 	 	35	 
	Section 8.04 Documents to Be Given to Trustee
	 	 	35	 
	Section 8.05 Notation on Securities in Respect of Supplemental Indentures
	 	 	35	 
	 
	 	 	 	 
	ARTICLE 9 CONSOLIDATION, MERGER, SALE OR CONVEYANCE
	 	 	36	 
	Section 9.01 Issuer May Consolidate, Etc., on Certain Terms
	 	 	36	 
	Section 9.02 Successor Issuer Substituted
	 	 	37	 
	 
	 	 	 	 
	ARTICLE 10 SATISFACTION AND DISCHARGE OF INDENTURE; UNCLAIMED MONEYS
	 	 	37	 
	Section 10.01 Satisfaction and Discharge of Indenture
	 	 	37	 

ii 

 

	 	 	 	 	 
	 	 	PAGE	 
	Section 10.02 Application by Trustee of Funds Deposited for Payment of Securities
	 	 	39	 
	Section 10.03 Repayment of Moneys Held by Paying Agent
	 	 	40	 
	Section 10.04 Return of Moneys Held by Trustee and Paying Agent Unclaimed for Two
Years
	 	 	40	 
	Section 10.05 Indemnity for U.S. Government Obligations
	 	 	40	 
	 
	 	 	 	 
	ARTICLE 11 MISCELLANEOUS PROVISIONS
	 	 	40	 
	Section 11.01 No Recourse
	 	 	40	 
	Section 11.02 Provisions of Indenture for the Sole Benefit of Parties and Holders
of Securities
	 	 	41	 
	Section 11.03 Successors and Assigns of Issuer Bound by Indenture
	 	 	41	 
	Section 11.04 Notices and Demands on Issuer, Trustee and Holders of Securities
	 	 	41	 
	Section 11.05 Officer’s Certificates and Opinions of Counsel; Statements to Be
Contained Therein
	 	 	42	 
	Section 11.06 Payments Due on Saturdays, Sundays and Holidays
	 	 	42	 
	Section 11.07 Conflict of Any Provision of Indenture With Trust Indenture Act of
1939
	 	 	43	 
	Section 11.08 New York Law to Govern
	 	 	43	 
	Section 11.09 Counterparts
	 	 	43	 
	Section 11.10 Effect of Headings
	 	 	43	 
	Section 11.11 Actions by Successor
	 	 	43	 
	Section 11.12 Severability
	 	 	43	 
	 
	 	 	 	 
	ARTICLE 12 REDEMPTION OF SECURITIES AND SINKING FUNDS
	 	 	43	 
	Section 12.01 Applicability of Article
	 	 	43	 
	Section 12.02 Notice of Redemption; Partial Redemptions
	 	 	43	 
	Section 12.03 Payment of Securities Called for Redemption
	 	 	45	 
	Section 12.04 Exclusion of Certain Securities from Eligibility for Selection for
Redemption
	 	 	45	 
	Section 12.05 Mandatory and Optional Sinking Funds
	 	 	45	 

iii 

 

     THIS
INDENTURE, dated as of ___ between PS BUSINESS PARKS, INC., a California
corporation (the “Issuer”), and ___, a
___ (the “Trustee”),

WITNESSETH :

     WHEREAS, the Issuer may from time to time duly authorize the issue of its unsecured
debentures, notes or other evidences of indebtedness to be issued in one or more series (the
“Securities”) up to such principal amount or amounts as may from time to time be authorized in
accordance with the terms of this Indenture;

     WHEREAS, the Issuer has duly authorized the execution and delivery of this Indenture to
provide, among other things, for the authentication, delivery and administration of the Securities;
and

     WHEREAS, all things necessary to make this Indenture a valid indenture and agreement according
to its terms have been done;

     NOW, THEREFORE:

     In consideration of the premises and the purchases of the Securities by the holders thereof,
the Issuer and the Trustee mutually covenant and agree for the equal and proportionate benefit of
the respective holders from time to time of the Securities as follows:

ARTICLE 1

DEFINITIONS

     Section 1.01 Certain Terms Defined. The following terms (except as otherwise expressly
provided or unless the context otherwise clearly requires) for all purposes of this Indenture and
of any indenture supplemental hereto shall have the respective meanings specified in this Section.
All other terms used in this Indenture that are defined in the Trust Indenture Act of 1939 or the
definitions of which in the Securities Act of 1933 are referred to in the Trust Indenture Act of
1939, including terms defined therein by reference to the Securities Act of 1933 (except as herein
otherwise expressly provided or unless the context otherwise clearly requires), shall have the
meanings assigned to such terms in said Trust Indenture Act and in said Securities Act as in force
at the date of this Indenture. All accounting terms used herein and not expressly defined shall
have the meanings assigned to such terms in accordance with generally accepted accounting
principles, and the term “generally accepted accounting principles” means such accounting
principles as are generally accepted at the time of any computation. The words “herein”, “hereof”
and “hereunder” and other words of similar import refer to this Indenture as a whole and not to any
particular Article, Section or other subdivision. The terms defined in this Article have the
meanings assigned to them in this Article and include the plural as well as the singular.

     “Board of Directors” means either the Board of Directors of the Issuer or any committee of
such Board duly authorized to act on its behalf.

 

 

     “Board Resolution” means a copy of one or more resolutions, certified by the secretary or an
assistant secretary of the Issuer to have been duly adopted by the Board of Directors and to be in
full force and effect, and delivered to the Trustee.

     “Business Day” means, with respect to any Security, a day that in the city (or in any of the
cities, if more than one) in which amounts are payable, as specified in the form of such Security,
is not a day on which banking institutions are authorized or required by law or regulation to
close.

     “Commission” means the Securities and Exchange Commission, as from time to time constituted,
created under the Securities Exchange Act of 1934, or if at any time after the execution and
delivery of this Indenture such Commission is not existing and performing the duties now assigned
to it under the Trust Indenture Act of 1939, then the body performing such duties on such date.

     “Common Stock” means shares of Common Stock, par value $0.01 per share, of the Issuer as the
same exists at the date of execution and delivery of this Indenture or as such stock may be
reconstituted from time to time.

     “Corporate Trust Office” means the office of the Trustee at which the corporate trust business
of the Trustee shall, at any particular time, be principally administered, which office is, at the
date as of which this Indenture is dated, located at ___.

     “Debt” of any Person means any debt for money borrowed which is created, assumed, incurred or
guaranteed in any manner by such Person or for which such Person is otherwise responsible or
liable, and shall expressly include any such guaranty thereof by such Person. For the purpose of
computing the amount of the Debt of any Person there shall be excluded all Debt of such Person for
the payment or redemption or satisfaction of which money or securities (or evidences of such Debt,
if permitted under the terms of the instrument creating such Debt) in the necessary amount shall
have been deposited in trust with the proper depositary, whether upon or prior to the maturity or
the date fixed for redemption of such Debt; and, in any instance where Debt is so excluded, for the
purpose of computing the assets of such Person there shall be excluded the money, securities or
evidences of Debt deposited by such Person in trust for the purpose of paying or satisfying such
Debt.

     “Depositary” means, with respect to the Securities of any series issuable or issued in the
form of one or more Global Securities, the Person designated as Depositary by the Issuer pursuant
to Section 2.04 until a successor Depositary shall have become such pursuant to the applicable
provisions of this Indenture, and thereafter “Depositary” shall mean or include each Person who is
then a Depositary hereunder, and if at any time there is more than one such Person, “Depositary” as
used with respect to the Securities of any such series shall mean the Depositary with respect to
the Global Securities of that series.

     “Dollar” means the currency of the United States of America as at the time of payment is legal
tender for the payment of public and private debts.

     “Event of Default” means any event or condition specified as such in Section 5.01.

2

 

     “Foreign Currency” means a currency issued by the government of a country other than the
United States.

     “Global Security”, means a Security evidencing all or a part of a series of Securities, issued
to the Depositary for such series in accordance with Section 2.04, and bearing the legend
prescribed in Section 2.04.

     “Holder”, “holder of Securities”, “Securityholder” or other similar terms mean the Person in
whose name such Security is registered in the Security register kept by the Issuer for that purpose
in accordance with the terms hereof.

     “Indenture” means this instrument as originally executed and delivered or, if amended or
supplemented as herein provided, as so amended or supplemented or both, and shall include the forms
and terms of particular series of Securities established as contemplated hereunder.

     “interest”, unless the context otherwise requires, refers to interest, and when used with
respect to non-interest bearing Securities, refers to interest payable after maturity, if any.

     “Issuer” means PS Business Parks, Inc. and, subject to Article 9, its successors and assigns.

     “Issuer Order” means a written statement, request or order of the Issuer signed in its name by
the chairman of the Board of Directors, the president or any vice president of the Issuer.

     “Officer’s Certificate” means a certificate signed by the chairman of the Board of Directors,
the president, any vice president, the treasurer, the secretary or any assistant secretary of the
Issuer and delivered to the Trustee. Each such certificate shall comply with Section 314 of the
Trust Indenture Act of 1939 and shall include the statements provided for in Section 11.05.

     “Opinion of Counsel” means an opinion in writing signed by the general corporate counsel or
such other legal counsel who may be an employee of or counsel to the Issuer and who shall be
satisfactory to the Trustee. Each such opinion shall comply with Section 314 of the Trust
Indenture Act of 1939 and shall include the statements provided for in Section 11.05, if and to the
extent required hereby.

     “original issue date” of any Security (or portion thereof) means the earlier of (a) the date
of such Security or (b) the date of any Security (or portion thereof) for which such Security was
issued (directly or indirectly) on registration of transfer, exchange or substitution.

     “Original Issue Discount Security” means any Security that provides for an amount less than
the principal amount thereof to be due and payable upon a declaration of acceleration of the
maturity thereof pursuant to Section 5.01.

     “Outstanding”, when used with reference to Securities, shall, subject to the provisions of
Section 7.04, mean, as of any particular time, all Securities authenticated and delivered by the
Trustee under this Indenture, except

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     (a) Securities theretofore cancelled by the Trustee or delivered to the Trustee for
cancellation;

     (b) Securities, or portions thereof, for the payment or redemption of which moneys or
U.S. Government Obligations (as provided for in Section 10.01) in the necessary amount shall
have been deposited in trust with the Trustee or with any paying agent (other than the
Issuer) or shall have been set aside, segregated and held in trust by the Issuer for the
Holders of such Securities (if the Issuer shall act as its own paying agent); provided, that
if such Securities, or portions thereof, are to be redeemed prior to the maturity thereof,
notice of such redemption shall have been given as herein provided, or provision
satisfactory to the Trustee shall have been made for giving such notice; and

     (c) Securities in substitution for which other Securities shall have been authenticated
and delivered, or which shall have been paid, pursuant to the terms of Section 2.09 (except
with respect to any such Security as to which proof satisfactory to the Trustee is presented
that such Security is held by a Person in whose hands such Security is a legal, valid and
binding obligation of the Issuer), Securities converted into Common Stock pursuant hereto
and Securities not deemed outstanding pursuant to Section 12.02.

     In determining whether the Holders of the requisite principal amount of Outstanding Securities
of any or all series have given any request, demand, authorization, direction, notice, consent or
waiver hereunder, the principal amount of an Original Issue Discount Security that shall be deemed
to be Outstanding for such purposes shall be the amount of the principal thereof that would be due
and payable as of the date of such determination upon a declaration of acceleration of the maturity
thereof pursuant to Section 5.01.

     “Person” means any individual, corporation, partnership, limited partnership, limited
liability company, joint venture, association, joint stock company, trust, unincorporated
organization or government or any agency or political subdivision thereof.

     “principal” whenever used with reference to the Securities or any Security or any portion
thereof, shall be deemed to include “and premium, if any”.

     “Responsible Officer”, when used with respect to the Trustee, means the chairman of the board
of directors, any vice chairman of the board of directors, the chairman of the trust committee, the
chairman of the executive committee, any vice chairman of the executive committee, the president,
any vice president, the cashier, the secretary, the treasurer, any trust officer, any assistant
trust officer, any assistant vice president, any assistant cashier, any assistant secretary, any
assistant treasurer, or any other officer or assistant officer of the Trustee customarily
performing functions similar to those performed by the persons who at the time shall be such
officers, respectively, or to whom any corporate trust matter is referred because of his or her
knowledge of and familiarity with the particular subject.

     “Security” or “Securities” has the meaning stated in the first recital of this Indenture, or,
as the case may be, Securities that have been authenticated and delivered under this Indenture.

     “Security Registrar” shall have the meaning set forth in Section 4.01(b).

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     “Subsidiary” means a corporation of which stock having a majority of the voting power under
ordinary circumstances is owned, directly or indirectly, by the Issuer or by one or more
subsidiaries of the Issuer, or by the Issuer and one or more subsidiaries of the Issuer.

     “Trust Indenture Act of 1939” (except as otherwise provided in Sections 8.01 and 8.02) means
the Trust Indenture Act of 1939 as in force at the date as of which this Indenture was originally
executed.

     “Trustee” means the Person identified as “Trustee” in the first paragraph hereof and, subject
to the provisions of Article 6, shall also include any successor trustee. “Trustee” shall also
mean or include each Person who is then a trustee hereunder and if at any time there is more than
one such Person, “Trustee” as used with respect to the Securities of any series shall mean the
trustee with respect to the Securities of such series.

     “U.S. Government Obligations” shall have the meaning set forth in Section 10.01(a).

     “vice president”, when used with respect to the Issuer or the Trustee, means any vice
president, whether or not designated by a number or a word or words added before or after the title
of “vice president”.

     “Yield to Maturity” means the yield to maturity on a series of securities, calculated at the
time of issuance of such series, or, if applicable, at the most recent redetermination of interest
on such series, and calculated in accordance with accepted financial practice.

ARTICLE 2

SECURITIES

     Section 2.01 Forms Generally. The Securities of each series shall be substantially in such
form (not inconsistent with this Indenture) as shall be established by or pursuant to one or more
Board Resolutions (as set forth in a Board Resolution or, to the extent established pursuant to
(rather than set forth in) a Board Resolution, an Officer’s Certificate detailing such
establishment) or in one or more indentures supplemental hereto, in each case with such appropriate
insertions, omissions, substitutions and other variations as are required or permitted by this
Indenture and may have imprinted or otherwise reproduced thereon such legend or legends or
endorsements, not inconsistent with the provisions of this Indenture, as may be required to comply
with any law or with any rules or regulations pursuant thereto, or with any rules of any securities
exchange or to conform to general usage, all as may be determined by the officers executing such
Securities as evidenced by their execution of such Securities.

     The definitive Securities shall be printed, lithographed or engraved on steel engraved borders
or may be produced in any other manner, all as determined by the officers executing such Securities
as evidenced by their execution of such Securities.

     Section 2.02 Form of Trustee’s Certificate of Authentication. The Trustee’s certificate of
authentication on all Securities shall be in substantially the following form:

     This is one of the Securities of the series designated herein and referred to in the
within-mentioned Indenture.

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	 	 	as Trustee
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	 	 	Authorized Officer

     Section 2.03 Amount Unlimited; Issuable in Series. The aggregate principal amount of
Securities which may be authenticated and delivered under this Indenture is unlimited.

     The Securities may be issued in one or more series. The terms of a series of Securities shall
be established prior to the initial issuance thereof in or pursuant to one or more Board
Resolutions of the Board of Directors and set forth in a Board Resolution, or, to the extent
established pursuant to (rather than set forth in) a Board Resolution, in an Officer’s Certificate
detailing such establishment and/or established in one or more indentures supplemental hereto. The
terms of such series reflected in such Board Resolution, Officer’s Certificate, or supplemental
indenture may include the following or any additional or different terms:

     (a) the designation of the Securities of the series (which may be part of a series of
Securities previously issued);

     (b) the terms and conditions, if applicable, upon which conversion or exchange of the
Securities into Common Stock will be effected, including the initial conversion or exchange
price or rate and any adjustments thereto, the conversion or exchange period and other
provisions in addition to or in lieu of those described herein;

     (c) any limit upon the aggregate principal amount of the Securities of the series that
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 of the series pursuant to Section 2.08, 2.09, 2.11, 8.05 or 12.03);

     (d) if other than Dollars, the Foreign Currency in which the Securities of that series
are denominated;

     (e) any date on which the principal of the Securities of the series is payable;

     (f) the rate or rates at which the Securities of the series shall bear interest, if
any, the record date or dates for the determination of holders to whom interest is payable,
the date or dates from which such interest shall accrue and on which such interest shall be
payable and/or the method by which such rate or rates or date or dates shall be determined;

     (g) the place or places where the principal of and any interest on Securities of the
series shall be payable (if other than as provided in Section 3.02);

     (h) the price or prices at which, the period or periods within which and the terms and
conditions upon which Securities of the series may be redeemed, in whole or in part, at the
option of the Issuer, pursuant to any sinking fund or otherwise;

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     (i) the obligation, if any, of the Issuer to redeem, purchase or repay Securities of
the series pursuant to any mandatory redemption, sinking fund or analogous provisions or at
the option of a Holder thereof and the price or prices at which and the period or periods
within which and any terms and conditions upon which Securities of the series shall be
redeemed, purchased or repaid, in whole or in part, pursuant to such obligation;

     (j) if other than denominations of $1,000 and any integral multiple thereof, the
denominations in which Securities of the series shall be issuable;

     (k) if other than the principal amount thereof, the portion of the principal amount of
Securities of the series which shall be payable upon declaration of acceleration of the
maturity thereof;

     (l) if other than the currency in which the Securities of that series are denominated,
the currency in which payment of the principal of or interest on the Securities of such
series shall be payable;

     (m) if the principal of or interest on the Securities of the series is to be payable,
at the election of the Issuer or a Holder thereof, in a currency other than that in which
the Securities are denominated, the period or periods within which, and the terms and
conditions upon which, such election may be made;

     (n) if the amount of payments of principal of and interest on the Securities of the
series may be determined with reference to an index based on a currency other than that in
which the Securities of the series are denominated, the manner in which such amounts shall
be determined;

     (o) whether and upon what terms the Securities may be defeased;

     (p) whether and under what circumstances the Issuer will pay additional amounts on the
Securities of any series in respect of any tax, assessment or governmental charge withheld
or deducted and, if so, whether the Issuer will have the option to redeem such Securities
rather than pay such additional amounts;

     (q) if the Securities of such series are to be issuable in definitive form (whether
upon original issue or upon exchange of a temporary Security of such series) only upon
receipt of certain certificates or other documents or satisfaction of other conditions, then
the form and terms of such certificates, documents or conditions;

     (r) any trustees, authenticating or paying agents, transfer agents or registrars or any
other agents with respect to the Securities of such series;

     (s) any other events of default or covenants with respect to the Securities of such
series in addition to or in lieu of those contained in this Indenture;

     (t) if the Securities of the series may be issued in exchange for surrendered
Securities of another series, or for other securities of the Issuer, pursuant to the terms
of such Securities or securities or of any agreement entered into by the Issuer, the ratio
of

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the principal amount of the Securities of the series to be issued to the principal
amount of the Securities or securities to be surrendered in exchange, and any other material
terms of the exchange; and

     (u) any other terms of the series.

     The Issuer may from time to time, without notice to or the consent of the holders of any
series of Securities, create and issue further Securities of any such series ranking equally with
the Securities of such series in all respects (or in all respects other than the payment of
interest accruing prior to the issue date of such further Securities or except for the first
payment of interest following the issue date of such further Securities). Such further Securities
may be consolidated and form a single series with the Securities of such series and have the same
terms as to status, redemption or otherwise as the Securities of such series.

     Section 2.04 Authentication and Delivery of Securities. The Issuer may deliver Securities of
any series executed by the Issuer to the Trustee for authentication together with the applicable
documents referred to below in this Section, and the Trustee shall thereupon authenticate and
deliver such Securities to or upon the order of the Issuer (contained in the Issuer Order referred
to below in this Section) or pursuant to such procedures acceptable to the Trustee and to such
recipients as may be specified from time to time by an Issuer Order. The maturity date, original
issue date, interest rate and any other terms of the Securities of such series shall be determined
by or pursuant to such Issuer Order and procedures. If provided for in such procedures, such
Issuer Order may authorize authentication and delivery pursuant to oral instructions from the
Issuer or its duly authorized agent, which instructions shall be promptly confirmed in writing. In
authenticating such Securities and accepting the additional responsibilities under this Indenture
in relation to such Securities, the Trustee shall be entitled to receive, and (subject to Section
6.01) shall be fully protected in relying upon:

     (a) an Issuer Order requesting such authentication and setting forth delivery
instructions if the Securities are not to be delivered to the Issuer;

     (b) any Board Resolution, Officer’s Certificate and/or executed supplemental indenture
referred to in Sections 2.01 and 2.03 by or pursuant to which the forms and terms of the
Securities were established;

     (c) an Officer’s Certificate setting forth the form or forms and terms of the
Securities stating that the form or forms and terms of the Securities have been established
pursuant to Sections 2.01 and 2.03 and comply with this Indenture, and covering such other
matters as the Trustee may reasonably request; and

     (d) an Opinion of Counsel to the effect that:

     (i) the form or forms and terms of such Securities have been established
pursuant to Sections 2.01 and 2.03 and comply with this Indenture,

     (ii) the authentication and delivery of such Securities by the Trustee are
authorized under the provisions of this Indenture,

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     (iii) such Securities when authenticated and delivered by the Trustee and
issued by the Issuer in the manner and subject to any conditions specified in such
Opinion of Counsel, will constitute valid and binding obligations of the Issuer, and

     (iv) all laws and requirements in respect of the execution and delivery by the
Issuer of the Securities have been complied with,

and covering such other matters as the Trustee may reasonably request.

     The Trustee shall have the right to decline to authenticate and deliver any Securities under
this Section if the Trustee, being advised by counsel, determines that such action may not lawfully
be taken by the Issuer or if the Trustee in good faith by its board of directors or board of
trustees, executive committee, or a trust committee of directors or trustees or Responsible
Officers shall determine that such action would expose the Trustee to personal liability to
existing Holders or would affect the Trustee’s own rights, duties or immunities under the
Securities, this Indenture or otherwise.

     The Issuer shall execute and the Trustee shall, in accordance with this Section with respect
to the Securities of a series, authenticate and deliver one or more Global Securities that (i)
shall represent and shall be denominated in an amount equal to the aggregate principal amount of
all of the Securities of such series issued and not yet cancelled, (ii) shall be registered in the
name of the Depositary for such Global Security or Securities or the nominee of such Depositary,
(iii) shall be delivered by the Trustee to such Depositary or pursuant to such Depositary’s
instructions and (iv) shall bear a legend substantially to the following effect: “Unless and until
it is exchanged in whole or in part for Securities in definitive registered form, this Security may
not be transferred except as a whole by the Depositary to the nominee of the Depositary or by a
nominee of the Depositary to the Depositary or another nominee of the Depositary or by the
Depositary or any such nominee to a successor Depositary or a nominee of such successor
Depositary.”

     Each Depositary designated pursuant to this Section must, at the time of its designation and
at all times while it serves as Depositary, be a clearing agency registered under the Securities
Exchange Act of 1934 and any other applicable statute or regulation.

     Section 2.05 Execution of Securities. The Securities shall be signed on behalf of the Issuer
by the chairman of its Board of Directors, any vice chairman of its Board of Directors, its chief
executive officer, its principal financial officer, its president, any vice president or its
treasurer. Such signatures may be the manual or facsimile signatures of the present or any future
such officers. Typographical and other minor errors or defects in any such reproduction of any
such signature shall not affect the validity or enforceability of any Security that has been duly
authenticated and delivered by the Trustee.

     In case any officer of the Issuer who shall have signed any of the Securities shall cease to
be such officer before the Security so signed shall be authenticated and delivered by the Trustee
or disposed of by the Issuer, such Security nevertheless may be authenticated and delivered or
disposed of as though the person who signed such Security had not ceased to be such officer of

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the Issuer; and any Security may be signed on behalf of the Issuer by such persons as, at the
actual date of the execution of such Security, shall be the proper officers of the Issuer, although
at the date of the execution and delivery of this Indenture any such person was not such an
officer.

     Section 2.06 Certificate of Authentication. Only such Securities as shall bear thereon a
certificate of authentication substantially in the form hereinbefore recited, executed by the
Trustee by the manual signature of one of its authorized officers, shall be entitled to the
benefits of this Indenture or be valid or obligatory for any purpose. The execution of such
certificate by the Trustee upon any Security executed by the Issuer shall be conclusive evidence
that the Security so authenticated has been duly authenticated and delivered hereunder and that the
Holder is entitled to the benefits of this Indenture.

     Section 2.07 Denomination and Date of Securities; Payments of Interest. The Securities of
each series shall be issuable in denominations established as contemplated by Section 2.03 or, if
not so established, in denominations of $1,000 and any integral multiple thereof. The Securities
of each series shall be numbered, lettered or otherwise distinguished in such manner or in
accordance with such plan as the officers of the Issuer executing the same may determine with the
approval of the Trustee, as evidenced by the execution and authentication thereof. Unless
otherwise indicated in a Board Resolution, Officer’s Certificate or supplemental indenture for a
particular series, interest will be calculated on the basis of a 360-day year of twelve 30-day
months.

     Each Security shall be dated the date of its authentication. The Securities of each series
shall bear interest, if any, from the date, and such interest shall be payable on the dates,
established as contemplated by Section 2.03.

     The Person in whose name any Security of any series is registered at the close of business on
any record date applicable to a particular series with respect to any interest payment date for
such series shall be entitled to receive the interest, if any, payable on such interest payment
date notwithstanding any transfer, exchange or conversion of such Security subsequent to the record
date and prior to such interest payment date, except if and to the extent the Issuer shall default
in the payment of the interest due on such interest payment date for such series, in which case
such defaulted interest shall be paid to the Persons in whose names Outstanding Securities for such
series are registered at the close of business on a subsequent record date (which shall be not less
than five Business Days prior to the date of payment of such defaulted interest) established by
notice given by mail by or on behalf of the Issuer to the Holders of Securities not less than 15
days preceding such subsequent record date. The term “record date” as used with respect to any
interest payment date (except a date for payment of defaulted interest) for the Securities of any
series shall mean the date specified as such in the terms of the Securities of such series
established as contemplated by Section 2.03, or, if no such date is so established, if such
interest payment date is the first day of a calendar month, the 15th day of the next preceding
calendar month or, if such interest payment date is the 15th day of a calendar month, the first day
of such calendar month, whether or not such record date is a Business Day.

     Section 2.08 Registration, Transfer and Exchange. The Issuer will keep at each office or
agency to be maintained for the purpose as provided in Section 3.02 for each series of

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Securities a register or registers in which, subject to such reasonable regulations as it may
prescribe, it will provide for the registration of Securities of such series and the registration
of transfer of Securities of such series. Such register shall be in written form in the English
language or in any other form capable of being converted into such form within a reasonable time.
At all reasonable times such register or registers shall be open for inspection by the Trustee.

     Upon due presentation for registration of transfer of any Security of any series at any such
office or agency to be maintained for the purpose as provided in Section 3.02, the Issuer shall
execute and the Trustee shall authenticate and deliver in the name of the transferee or transferees
a new Security or Securities of the same series, maturity date, interest rate and original issue
date in authorized denominations for a like aggregate principal amount.

     At the option of the Holder thereof, Securities of any series (except a Global Security) may
be exchanged for a Security or Securities of such series having authorized denominations and an
equal aggregate principal amount, upon surrender of such Securities to be exchanged at the agency
of the Issuer that shall be maintained for such purpose in accordance with Section 3.02 and upon
payment, if the Issuer shall so require, of the charges hereinafter provided. Whenever any
Securities are so surrendered for exchange, the Issuer shall execute, and the Trustee shall
authenticate and deliver, the Securities which the Holder making the exchange is entitled to
receive. All Securities surrendered upon any exchange or transfer provided for in this Indenture
shall be promptly cancelled and disposed of by the Trustee and the Trustee will deliver a
certificate of disposition thereof to the Issuer.

     All Securities presented for registration of transfer, exchange, redemption or payment shall
(if so required by the Issuer or the Trustee) be duly endorsed by, or be accompanied by a written
instrument or instruments of transfer in form satisfactory to the Issuer and the Trustee duly
executed by, the Holder or his or her attorney duly authorized in writing.

     The Issuer may require payment of a sum sufficient to cover any stamp or other tax or other
governmental charge that may be imposed in connection with any exchange or registration of transfer
of Securities. No service charge shall be made for any such transaction.

     The Issuer shall not be required to exchange or register a transfer of (a) any Securities of
any series for a period of 15 days next preceding the first mailing of notice of redemption of
Securities of such series to be redeemed or (b) any Securities selected, called or being called for
redemption, in whole or in part, except, in the case of any Security to be redeemed in part, the
portion thereof not so to be redeemed.

     Notwithstanding any other provision of this Section 2.08, unless and until it is exchanged in
whole or in part for Securities in definitive registered form, a Global Security representing all
or a portion of the Securities of a series may not be transferred except as a whole by the
Depositary for such series to a nominee of such Depositary or by a nominee of such Depositary to
such Depositary or another nominee of such Depositary or by such Depositary or any such nominee to
a successor Depositary for such series or a nominee of such successor Depositary.

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     If at any time the Depositary for the Securities of a series notifies the Issuer that it is
unwilling or unable to continue as Depositary for the Securities of such series or if at any time
the Depositary for the Securities of a series shall no longer be eligible under Section 2.04, the
Issuer shall appoint a successor Depositary with respect to the Securities of such series. If a
successor Depositary for the Securities of such series is not appointed by the Issuer within 90
days after the Issuer receives such notice or becomes aware of such ineligibility, the Issuer’s
election pursuant to Section 2.03 that the Securities of such series be represented by a Global
Security shall no longer be effective and the Issuer will execute, and the Trustee, upon receipt of
an Officer’s Certificate for the authentication and delivery of definitive Securities of such
series, will authenticate and deliver, Securities of such series in definitive registered form, in
any authorized denominations, in an aggregate principal amount equal to the principal amount of the
Global Security or Securities representing the Securities of such series, in exchange for such
Global Security or Securities.

     The Issuer may at any time and in its sole discretion determine that the Securities of any
series issued in the form of one or more Global Securities shall no longer be represented by a
Global Security or Securities. In such event the Issuer will execute, and the Trustee, upon
receipt of an Officer’s Certificate for the authentication and delivery of definitive Securities of
such series, will authenticate and deliver, Securities of such series in definitive registered
form, in any authorized denominations, in an aggregate principal amount equal to the principal
amount of the Global Security or Securities representing such series, in exchange for such Global
Security or Securities.

     The Depositary for such Global Security may surrender such Global Security in exchange in
whole or in part for Securities of the same series in definitive registered form on such terms as
are acceptable to the Issuer and such Depositary. Thereupon, the Issuer shall execute, and the
Trustee shall authenticate and deliver, without service charge,

     (i) to the Person specified by such Depositary a new Security or Securities of
the same series, of any authorized denominations as requested by such Person, in an
aggregate principal amount equal to and in exchange for such Person’s beneficial
interest in the Global Security; and

     (ii) to such Depositary a new Global Security in a denomination equal to the
difference, if any, between the principal amount of the surrendered Global Security
and the aggregate principal amount of Securities authenticated and delivered
pursuant to clause (i) above.

     Upon the exchange of a Global Security for Securities in definitive registered form, in
authorized denominations, such Global Security shall be cancelled by the Trustee. Securities in
definitive registered form issued in exchange for a Global Security pursuant to this Section 2.08
shall be registered in such names and in such authorized denominations as the Depositary for such
Global Security, pursuant to instructions from its direct or indirect participants or otherwise,
shall instruct the Trustee. The Trustee shall deliver such Securities to or as directed by the
Persons in whose names such Securities are so registered.

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     All Securities issued upon any transfer or exchange of Securities shall be valid obligations
of the Issuer, evidencing the same debt, and entitled to the same benefits under this Indenture, as
the Securities surrendered upon such transfer or exchange.

     Section 2.09 Mutilated, Defaced, Destroyed, Lost and Stolen Securities. In case any temporary
or definitive Security shall become mutilated, defaced or be destroyed, lost or stolen, the Issuer
in its discretion may execute, and upon the written request of any officer of the Issuer, the
Trustee shall authenticate and deliver a new Security of the same series, maturity date, interest
rate and original issue date, bearing a number or other distinguishing symbol not contemporaneously
outstanding, in exchange and substitution for the mutilated or defaced Security, or in lieu of and
substitution for the Security so destroyed, lost or stolen. In every case the applicant for a
substitute Security shall furnish to the Issuer and to the Trustee and any agent of the Issuer or
the Trustee such security or indemnity as may be required by them to indemnify and defend and to
save each of them harmless and, in every case of destruction, loss or theft, evidence to their
satisfaction of the destruction, loss or theft of such Security and of the ownership thereof and in
the case of mutilation or defacement shall surrender the Security to the Trustee.

     Upon the issuance of any substitute Security, the Issuer may require the payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in relation thereto
and any other expenses (including the fees and expenses of the Trustee) connected therewith. In
case any Security which has matured or is about to mature or has been called for redemption in
full, or is being surrendered for conversion in full, shall become mutilated or defaced or be
destroyed, lost or stolen, the Issuer may, instead of issuing a substitute Security (with the
Holder’s consent, in the case of convertible Securities), pay or authorize the payment of the same
or convert, or authorize conversion of the same (without surrender thereof except in the case of a
mutilated or defaced Security), if the applicant for such payment shall furnish to the Issuer and
to the Trustee and any agent of the Issuer or the Trustee such security or indemnity as any of them
may require to save each of them harmless, and, in every case of destruction, loss or theft, the
applicant shall also furnish to the Issuer and the Trustee and any agent of the Issuer or the
Trustee evidence to their satisfaction of the destruction, loss or theft of such Security and of
the ownership thereof.

     Every substitute Security of any series issued pursuant to the provisions of this Section by
virtue of the fact that any such Security is destroyed, lost or stolen shall constitute an
additional contractual obligation of the Issuer, whether or not the destroyed, lost or stolen
Security shall be at any time enforceable by anyone and shall be entitled to all the benefits of
(but shall be subject to all the limitations of rights set forth in) this Indenture equally and
proportionately with any and all other Securities of such series duly authenticated and delivered
hereunder. All Securities shall be held and owned upon the express condition that, to the extent
permitted by law, the foregoing provisions are exclusive with respect to the replacement or payment
or conversion of mutilated, defaced or destroyed, lost or stolen Securities and shall preclude any
and all other rights or remedies notwithstanding any law or statute existing or hereafter enacted
to the contrary with respect to the replacement or payment of negotiable instruments or other
securities without their surrender.

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     Section 2.10 Cancellation of Securities; Destruction Thereof. All Securities surrendered for
exchange for Securities of the same series or for payment, redemption, registration of transfer,
conversion or for credit against any payment in respect of a sinking or analogous fund, if
surrendered to the Issuer or any agent of the Issuer or the Trustee, shall be delivered to the
Trustee for cancellation or, if surrendered to the Trustee, shall be cancelled by it; and no
Securities shall be issued in lieu thereof except as expressly permitted by any of the provisions
of this Indenture. The Trustee shall dispose of cancelled Securities held by it and deliver a
certificate of disposition to the Issuer. If the Issuer shall acquire any of the Securities, such
acquisition shall not operate as a redemption or satisfaction of the Debt represented by such
Securities unless and until the same are delivered to the Trustee for cancellation.

     Section 2.11 Temporary Securities. Pending the preparation of definitive Securities for any
series, the Issuer may execute and the Trustee shall authenticate and deliver temporary Securities
for such series (printed, lithographed, typewritten or otherwise reproduced, in each case in form
satisfactory to the Trustee). Temporary Securities of any series shall be issuable in any
authorized denomination, and substantially in the form of the definitive Securities of such series
but with such omissions, insertions and variations as may be appropriate for temporary Securities,
all as may be determined by the Issuer with the concurrence of the Trustee as evidenced by the
execution and authentication thereof. Temporary Securities may contain such reference to any
provisions of this Indenture as may be appropriate. Every temporary Security shall be executed by
the Issuer and be authenticated by the Trustee upon the same conditions and in substantially the
same manner, and with like effect, as the definitive Securities. Without unreasonable delay the
Issuer shall execute and shall furnish definitive Securities of such series and thereupon temporary
Securities of such series may be surrendered in exchange therefor without charge at each office or
agency to be maintained by the Issuer for that purpose pursuant to Section 3.02 and the Trustee
shall authenticate and deliver in exchange for such temporary Securities of such series an equal
aggregate principal amount of definitive Securities of the same series having authorized
denominations. Until so exchanged, the temporary Securities of any series shall be entitled to the
same benefits under this Indenture as definitive Securities of such series, unless the benefits of
the temporary Securities are limited pursuant to Section 2.03.

ARTICLE 3

COVENANTS OF THE ISSUER

     Section 3.01 Payment of Principal and Interest. The Issuer covenants and agrees for the
benefit of each series of Securities that it will duly and punctually pay or cause to be paid the
principal of, and interest on, each of the Securities of such series (together with any additional
amounts payable pursuant to the terms of such Securities) at the place or places, at the respective
times and in the manner provided in such Securities and in this Indenture. The interest on
Securities (together with any additional amounts payable pursuant to the terms of such Securities)
shall be payable only to or upon the written order of the Holders thereof and at the option of the
Issuer may be paid by mailing checks for such interest payable to or upon the written order of such
Holders at their last addresses as they appear on the Security register of the Issuer.

     Section 3.02 Offices for Payments, Etc. The Issuer will maintain (i) in ___, an agency
where the Securities of each series may be presented for payment, an agency where the

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Securities of each series may be presented for exchange and conversion, if applicable, as
provided in this Indenture and an agency where the Securities of each series may be presented for
registration of transfer as in this Indenture provided and (ii) such further agencies in such
places as may be determined for the Securities of such series pursuant to Section 2.03.

     The Issuer will maintain in ___, an agency where notices and demands to or upon the
Issuer in respect of the Securities of any series or this Indenture may be served.

     The Issuer will give to the Trustee written notice of the location of each such agency and of
any change of location thereof. In case the Issuer shall fail to maintain any agency required by
this Section to be located in ___, or shall fail to give such notice of the location or of
any change in the location of any of the above agencies, presentations and demands may be made and
notices may be served at the Corporate Trust Office of the Trustee.

     The Issuer may from time to time designate one or more additional agencies where the
Securities of a series may be presented for payment, where the Securities of that series may be
presented for exchange or conversion, if applicable, as provided in this Indenture and pursuant to
Section 2.03 and where the Securities of that series may be presented for registration of transfer
as in this Indenture provided, and the Issuer may from time to time rescind any such designation,
as the Issuer may deem desirable or expedient; provided, however, that no such designation or
rescission shall in any manner relieve the Issuer of its obligation to maintain the agencies
provided for in this Section. The Issuer will give to the Trustee prompt written notice of any
such designation or rescission thereof.

     Section 3.03 Appointment to Fill a Vacancy in Office of Trustee. The Issuer, whenever
necessary to avoid or fill a vacancy in the office of Trustee, will appoint, in the manner provided
in Section 6.10, a Trustee, so that there shall at all times be a Trustee with respect to each
series of Securities hereunder.

     Section 3.04 Paying Agents. Whenever the Issuer shall appoint a paying agent other than the
Trustee with respect to the Securities of any series, it will cause such paying agent to execute
and deliver to the Trustee an instrument in which such agent shall agree with the Trustee, subject
to the provisions of this Section,

     (a) that it will hold all sums received by it as such agent for the payment of the
principal of or interest on the Securities of such series (whether such sums have been paid
to it by the Issuer or by any other obligor on the Securities of such series) in trust for
the benefit of the Holders of the Securities of such series or of the Trustee,

     (b) that it will give the Trustee notice of any failure by the Issuer (or by any other
obligor on the Securities of such series) to make any payment of the principal of or
interest on the Securities of such series when the same shall be due and payable, and

     (c) that at any time during the continuance of any such failure, upon the written
request of the Trustee, it will forthwith pay to the Trustee all sums so held in trust by
such paying agent.

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     The Issuer will, on or prior to each due date of the principal of or interest on the
Securities of such series, deposit with the paying agent a sum sufficient to pay such principal or
interest so becoming due, and (unless such paying agent is the Trustee) the Issuer will promptly
notify the Trustee of any failure to take such action.

     If the Issuer shall act as its own paying agent with respect to the Securities of any series,
it will, on or before each due date of the principal of or interest on the Securities of such
series, set aside, segregate and hold in trust for the benefit of the Holders of the Securities of
such series a sum sufficient to pay such principal or interest so becoming due. The Issuer will
promptly notify the Trustee of any failure to take such action.

     Anything in this Section to the contrary notwithstanding, but subject to Section 10.01, the
Issuer may at any time, for the purpose of obtaining a satisfaction and discharge with respect to
one or more or all series of Securities hereunder, or for any other reason, pay or cause to be paid
to the Trustee all sums held in trust for any such series by the Issuer or any paying agent
hereunder, as required by this Section, such sums to be held by the Trustee upon the trusts herein
contained.

     Anything in this Section to the contrary notwithstanding, the agreement to hold sums in trust
as provided in this Section is subject to the provisions of Sections 10.03 and 10.04.

     Section 3.05 Written Statement to Trustee. So long as any Securities are Outstanding
hereunder, the Issuer will deliver to the Trustee, within 120 days after the end of each fiscal
year of the Issuer ending after the date hereof, a written statement covering the previous fiscal
year, signed by two of its officers (which need not comply with Section 11.05), stating that in the
course of the performance of their duties as officers of the Issuer they would normally have
knowledge of any default by the Issuer in the performance or fulfillment of any covenant, agreement
or condition contained in this Indenture, stating whether or not they have knowledge of any such
default and, if so, specifying each such default of which the signers have knowledge and the nature
thereof.

ARTICLE 4

SECURITYHOLDERS LISTS AND REPORTS BY THE ISSUER AND THE TRUSTEE

     Section 4.01 Issuer to Furnish Trustee Information as to Names and Addresses of
Securityholders. The Issuer covenants and agrees that it will furnish or cause to be furnished to
the Trustee a list in such form as the Trustee may reasonably require of the names and addresses of
the Holders of the Securities of each series pursuant to Section 312 of the Trust Indenture Act of
1939:

     (a) semiannually and not more than 15 days after each record date for the payment of
interest on such Securities, as hereinabove specified, as of such record date and on dates
to be determined pursuant to Section 2.03 for non-interest bearing Securities in each year,
and

     (b) at such other times as the Trustee may request in writing, within 30 days after
receipt by the Issuer of any such request as of a date not more than 15 days prior to the
time such information is furnished, provided, that, if and so long as the Trustee shall

16

 

be the Security registrar (the “Security Registrar”) for such series, such list shall
not be required to be furnished.

     Section 4.02 Reports by the Issuer. The Issuer covenants to comply with Section 314(a) of the
Trust Indenture Act insofar as it relates to information, documentations, and other reports which
the Issuer may be required to file with the Commission pursuant to Section 13 or Section 15(d) of
the Securities Exchange Act of 1934.

     Section 4.03 Reports by the Trustee. Any Trustee’s report required under Section 313(a) of
the Trust Indenture Act of 1939 shall be transmitted on or before ___in each year following the
date hereof, so long as any Securities are Outstanding hereunder, and shall be dated as of a date
convenient to the Trustee but no more than 60 nor less than 45 days prior thereto. The Trustee
shall comply with Sections 313(b), 313(c) and 313(d) of the Trust Indenture Act.

     Section 4.04 Preservation of Information; Communication with Securityholders. (a) The Trustee
shall preserve, in as current a form as is reasonably practicable, all information as to the names
and addresses of the holders of Securities contained in the most recent list furnished to it as
provided in Section 4.01 and as to the names and addresses of holders of Securities received by the
Trustee in its capacity as Security Registrar (if acting in such capacity).

     (b) The Trustee may destroy any list furnished to it as provided in Section 4.01 upon receipt
of a new list so furnished.

     (c) Securityholders may communicate as provided in Section 312(b) of the Trust Indenture Act
with other Securityholders with respect to their rights under this Indenture or under the
Securities. The Issuer, the Trustee, the Security Registrar and any other Person shall have the
protection of Section 312(c) of the Trust Indenture Act.

ARTICLE 5

REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS ON EVENT OF DEFAULT

     Section 5.01 Event of Default Defined; Acceleration of Maturity; Waiver of Default. “Event of
Default”, with respect to Securities of any series wherever used herein, means each one of the
following events which shall have occurred and be continuing (whatever the reason for such Event of
Default and whether it shall be voluntary or involuntary or be effected by operation of law or
pursuant to any judgment, decree or order of any court or any order, rule or regulation of any
administrative or governmental body):

     (a) default in the payment of any installment of interest upon any of the Securities of
such series as and when the same shall become due and payable, and continuance of such
default for a period of 60 days (or such other period as may be established for the
Securities of such series as contemplated by Section 2.03); or

     (b) default in the payment of all or any part of the principal on any of the Securities
of such series as and when the same shall become due and payable either at maturity, upon
redemption, by declaration or otherwise, and the continuance of such

17

 

default for five days (or such other period as may be established for the Securities of
such series as contemplated by Section 2.03); or

     (c) default in the performance, or breach, of any covenant or warranty of the Issuer in
respect of the Securities of such series (other than a covenant or warranty in respect of
the Securities of such series a default in the performance or breach of which is elsewhere
in this Section specifically dealt with), and continuance of such default or breach for a
period of 90 days after there has been given, by registered or certified mail, to the Issuer
by the Trustee or to the Issuer and the Trustee by the Holders of at least 25% in principal
amount of the Outstanding Securities of all series affected thereby, a written notice
specifying such default or breach and requiring it to be remedied and stating that such
notice is a “Notice of Default” hereunder; or

     (d) a court having jurisdiction in the premises shall enter a decree or order for
relief in respect of the Issuer in an involuntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect, or appointing a receiver,
liquidator, assignee, custodian, trustee or sequestrator (or similar official) of the Issuer
or for all or substantially all of its property and assets or ordering the winding up or
liquidation of its affairs, and such decree or order shall remain unstayed and in effect for
a period of 60 consecutive days; or

     (e) the Issuer shall commence a voluntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect, or consent to the entry of an
order for relief in an involuntary case under any such law, or consent to the appointment of
or taking possession by a receiver, liquidator, assignee, custodian, trustee or sequestrator
(or similar official) of the Issuer or for any substantial part of its property and assets,
or make any general assignment for the benefit of creditors; or

     (f) any other Event of Default provided for in such series of Securities.

     If an Event of Default described in clauses (a), (b), (c) or (f) occurs and is continuing,
then, and in each and every such case, unless the principal of all of the Securities of such series
shall have already become due and payable, either the Trustee or the Holders of not less than 25%
in aggregate principal amount of the Securities of such series then Outstanding hereunder (each
such series voting as a separate class) by notice in writing to the Issuer (and to the Trustee if
given by Securityholders), may declare the entire principal (or, if the Securities of such series
are Original Issue Discount Securities, such portion of the principal amount as may be specified in
the terms of such series) of all Securities of such series and the interest accrued thereon, if
any, to be due and payable immediately, and upon any such declaration the same shall become
immediately due and payable. If an Event of Default described in clauses (d) or (e) occurs and is
continuing, then and in each and every such case, the entire principal (or, if any Securities are
Original Issue Discount Securities, such portion of the principal as may be specified in the terms
thereof) of all the Securities then Outstanding and interest accrued thereon, if any, shall become
immediately due and payable.

     The foregoing provisions, however, are subject to the condition that if, at any time after the
principal (or, if the Securities are Original Issue Discount Securities, such portion of the

18

 

principal as may be specified in the terms thereof) of the Securities of any series (or of all
the Securities, as the case may be) shall have been so declared due and payable, and before any
judgment or decree for the payment of the moneys due shall have been obtained or entered as
hereinafter provided, the Issuer shall pay or shall deposit with the Trustee a sum sufficient to
pay all matured installments of interest upon all the Securities of such series (or of all the
Securities, as the case may be) and the principal of any and all Securities of such series (or of
all the Securities, as the case may be) which shall have become due otherwise than by acceleration
(with interest upon such principal and, to the extent that payment of such interest is enforceable
under applicable law, on overdue installments of interest, at the same rate as the rate of interest
or Yield to Maturity (in the case of Original Issue Discount Securities) specified in the
Securities of such series, (or at the respective rates of interest or Yields to Maturity of all the
Securities, as the case may be) to the date of such payment or deposit) and such amount as shall be
sufficient to cover reasonable compensation to the Trustee, its agents, attorneys and counsel, and
all other expenses and liabilities incurred, and all advances made, by the Trustee except as a
result of negligence or bad faith, and if any and all Events of Default under the Indenture, other
than the non-payment of the principal of Securities which shall have become due by acceleration,
shall have been cured, waived or otherwise remedied as provided herein—then and in every such case
the Holders of a majority in aggregate principal amount of all the Securities of such series, each
series voting as a separate class, (or of all the Securities, as the case may be, voting as a
single class) then Outstanding, by written notice to the Issuer and to the Trustee, may waive all
defaults with respect to such series (or with respect to all the Securities, as the case may be)
and rescind and annul such declaration and its consequences, but no such waiver or rescission and
annulment shall extend to or shall affect any subsequent default or shall impair any right
consequent thereon.

     For all purposes under this Indenture, if a portion of the principal of any Original Issue
Discount Securities shall have been accelerated and declared due and payable pursuant to the
provisions hereof, then, from and after such declaration, unless such declaration has been
rescinded and annulled, the principal amount of such Original Issue Discount Securities shall be
deemed, for all purposes hereunder, to be such portion of the principal thereof as shall be due and
payable as a result of such acceleration, and payment of such portion of the principal thereof as
shall be due and payable as a result of such acceleration, together with interest, if any, thereon
and all other amounts owing thereunder, shall constitute payment in full of such Original Issue
Discount Securities.

     Section 5.02 Collection of Debt by Trustee; Trustee May Prove Debt. The Issuer covenants that
(a) in case default shall be made in the payment of any installment of interest on any of the
Securities of any series when such interest shall have become due and payable, and such default
shall have continued for a period of 30 days or (b) in case default shall be made in the payment of
all or any part of the principal of any of the Securities of any series when the same shall have
become due and payable, and such default shall have continued for a period of five days, whether
upon maturity of the Securities of such series or upon any redemption or by declaration or
otherwise—then, upon demand of the Trustee, the Issuer will pay to the Trustee for the benefit of
the Holders of the Securities of such series the whole amount that then shall have become due and
payable on all Securities of such series for principal or interest, as the case may be (with
interest to the date of such payment upon the overdue principal and, to the extent that payment of
such interest is enforceable under applicable law, on overdue installments of interest

19

 

at the same rate as the rate of interest or Yield to Maturity (in the case of Original Issue
Discount Securities) specified in the Securities of such series); and, in addition thereto, such
further amount as shall be sufficient to cover the costs and expenses of collection, including
reasonable compensation to the Trustee and each predecessor trustee, their respective agents,
attorneys and counsel, and any expenses and liabilities incurred, and all advances made, by the
Trustee and each predecessor trustee except as a result of its negligence or bad faith.

     In case the Issuer shall fail forthwith to pay such amounts upon such demand, the Trustee, in
its own name and as trustee of an express trust, shall be entitled and empowered to institute any
action or proceedings at law or in equity for the collection of the sums so due and unpaid, and may
prosecute any such action or proceedings to judgment or final decree, and may enforce any such
judgment or final decree against the Issuer or other obligor upon such Securities and collect in
the manner provided by law out of the property of the Issuer or other obligor upon such Securities,
wherever situated, the moneys adjudged or decreed to be payable.

     In case there shall be pending proceedings relative to the Issuer or any other obligor upon
the Securities under Title 11 of the United States Code or any other applicable Federal or state
bankruptcy, insolvency or other similar law, or in case a receiver, assignee or trustee in
bankruptcy or reorganization, liquidator, sequestrator or similar official shall have been
appointed for or taken possession of the Issuer or its property or such other obligor or its
property, or in case of any other comparable judicial proceedings relative to the Issuer or other
obligor upon the Securities of any series, or to the creditors or property of the Issuer or such
other obligor, the Trustee, irrespective of whether the principal of any Securities shall then be
due and payable as therein expressed or by declaration or otherwise and irrespective of whether the
Trustee shall have made any demand pursuant to the provisions of this Section, shall be entitled
and empowered, by intervention in such proceedings or otherwise:

     (i) to file and prove a claim or claims for the whole amount of principal and
interest (or, if the Securities of any series are Original Issue Discount
Securities, such portion of the principal amount as may be specified in the terms of
such series) owing and unpaid in respect of the Securities of any series, and to
file such other papers or documents as may be necessary or advisable in order to
have the claims of the Trustee (including any claim for reasonable compensation to
the Trustee and each predecessor trustee, and their respective agents, attorneys and
counsel, and for reimbursement of all expenses and liabilities incurred, and all
advances made, by the Trustee and each predecessor trustee, except as a result of
negligence or bad faith) and of the Securityholders allowed in any judicial
proceedings relative to the Issuer or other obligor upon the Securities of any
series, or to the creditors or property of the Issuer or such other obligor,

     (ii) unless prohibited by applicable law and regulations, to vote on behalf of
the Holders of the Securities of any series in any election of a trustee or a
standby trustee in arrangement, reorganization, liquidation or other bankruptcy or
insolvency proceedings or person performing similar functions in comparable
proceedings, and

20

 

     (iii) to collect and receive any moneys or other property payable or
deliverable on any such claims, and to distribute all amounts received with respect
to the claims of the Securityholders and of the Trustee on their behalf; and any
trustee, receiver or liquidator, custodian or other similar official is hereby
authorized by each of the Securityholders to make payments to the Trustee, and, in
the event that the Trustee shall consent to the making of payments directly to the
Securityholders, to pay to the Trustee such amounts as shall be sufficient to cover
reasonable compensation to the Trustee, each predecessor trustee and their
respective agents, attorneys and counsel, and all other expenses and liabilities
incurred, and all advances made, by the Trustee and each predecessor trustee except
as a result of negligence or bad faith and all other amounts due to the Trustee or
any predecessor trustee pursuant to Section 6.06.

     Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to
or vote for or accept or adopt on behalf of any Securityholder any plan of reorganization,
arrangement, adjustment or composition affecting the Securities of any series or the rights of any
Holder thereof, or to authorize the Trustee to vote in respect of the claim of any Securityholder
in any such proceeding except, as aforesaid, to vote for the election of a trustee in bankruptcy or
similar person.

     All rights of action and of asserting claims under this Indenture, or under any of the
Securities of any series, may be enforced by the Trustee without the possession of any of the
Securities of such series or the production thereof on any trial or other proceedings relative
thereto, and any such action or proceedings instituted by the Trustee shall be brought in its own
name as trustee of an express trust, and any recovery of judgment, subject to the payment of the
expenses, disbursements and compensation of the Trustee, each predecessor trustee and their
respective agents and attorneys, shall be for the ratable benefit of the Holders of the Securities
in respect of which such action was taken.

     In any proceedings brought by the Trustee (and also any proceedings involving the
interpretation of any provision of this Indenture to which the Trustee shall be a party), the
Trustee shall be held to represent all the Holders of the Securities in respect to which such
action was taken, and it shall not be necessary to make any Holders of such Securities parties to
any such proceedings.

     Section 5.03 Application of Proceeds. Any moneys collected by the Trustee pursuant to this
Article in respect of any series shall be applied in the following order at the date or dates fixed
by the Trustee and, in case of the distribution of such moneys on account of principal or interest,
upon presentation of the several Securities in respect of which monies have been collected and
stamping (or otherwise noting) thereon the payment, or issuing Securities of such series in reduced
principal amounts in exchange for the presented Securities of like series if only partially paid,
or upon surrender thereof if fully paid:

     FIRST: To the payment of all amounts due to the Trustee or any predecessor trustee
pursuant to Section 6.06;

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     SECOND: In case the principal of the Securities of such series in respect of which
moneys have been collected shall not have become and be then due and payable, to the payment
of interest on the Securities of such series in default in the order of the maturity of the
installments of such interest, with interest (to the extent that such interest has been
collected by the Trustee) upon the overdue installments of interest at the same rate as the
rate of interest or Yield to Maturity (in the case of Original Issue Discount Securities)
specified in such Securities, such payments to be made ratably to the Persons entitled
thereto, without discrimination or preference;

     THIRD: In case the principal of the Securities of such series in respect of which
moneys have been collected shall have become and shall be then due and payable, to the
payment of the whole amount then owing and unpaid upon all the Securities of such series for
principal and interest, with interest upon the overdue principal, and (to the extent that
such interest has been collected by the Trustee) upon overdue installments of interest at
the same rate as the rate of interest or Yield to Maturity (in the case of Original Issue
Discount Securities) specified in the Securities of such series; and in case such moneys
shall be insufficient to pay in full the whole amount so due and unpaid upon the Securities
of such series, then to the payment of such principal and interest or Yield to Maturity,
without preference or priority of principal over interest or Yield to Maturity, or of
interest or Yield to Maturity over principal, or of any installment of interest over any
other installment of interest, or of any Security of such series over any other Security of
such series, ratably to the aggregate of such principal and accrued and unpaid interest or
Yield to Maturity; and

     FOURTH: To the payment of the remainder, if any, to the Issuer or any other Person
lawfully entitled thereto.

     Section 5.04 Suits for Enforcement. In case an Event of Default has occurred, has not been
waived and is continuing, the Trustee may in its discretion proceed to protect and enforce the
rights vested in it by this Indenture by such appropriate judicial proceedings as the Trustee shall
deem most effectual to protect and enforce any such rights, either at law or in equity or in
bankruptcy or otherwise, whether for the specific enforcement of any covenant or agreement
contained in this Indenture or in aid of the exercise of any power granted in this Indenture or to
enforce any other legal or equitable right vested in the Trustee by this Indenture or by law.

     Section 5.05 Restoration of Rights on Abandonment of Proceedings. In case the Trustee shall
have proceeded to enforce any right under this Indenture and such proceedings shall have been
discontinued or abandoned for any reason, or shall have been determined adversely to the Trustee,
then and in every such case the Issuer and the Trustee shall be restored respectively to their
former positions and rights hereunder, and all rights, remedies and powers of the Issuer, the
Trustee and the Securityholders shall continue as though no such proceedings had been taken.

     Section 5.06 Limitations on Suits by Securityholders. No Holder of any Security of any series
shall have any right by virtue or by availing of any provision of this Indenture to institute any
action or proceeding at law or in equity or in bankruptcy or otherwise upon or under or with
respect to this Indenture, or for the appointment of a trustee, receiver, liquidator, custodian or

22

 

other similar official or for any other remedy hereunder, unless such Holder previously shall
have given to the Trustee written notice of default and of the continuance thereof, as hereinbefore
provided, and unless also the Holders of not less than 25% in aggregate principal amount of the
Securities of such series then Outstanding shall have made written request upon the Trustee to
institute such action or proceedings in its own name as trustee hereunder and shall have offered to
the Trustee such reasonable indemnity as it may require against the costs, expenses and liabilities
to be incurred therein or thereby and the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity shall have failed to institute any such action or proceeding and no
direction inconsistent with such written request shall have been given to the Trustee pursuant to
Section 5.09; it being understood and intended, and being expressly covenanted by the Holder of
every Security with every other Holder and the Trustee, that no one or more Holders of Securities
of any series shall have any right in any manner whatever by virtue or by availing of any provision
of this Indenture to affect, disturb or prejudice the rights of any other such Holder of
Securities, or to obtain or seek to obtain priority over or preference to any other such Holder or
to enforce any right under this Indenture, except in the manner herein provided and for the equal,
ratable and common benefit of all Holders of Securities of the applicable series. For the
protection and enforcement of the provisions of this Section, each and every Securityholder and the
Trustee shall be entitled to such relief as can be given either at law or in equity.

     Section 5.07 Unconditional Right of Securityholders to Institute Certain Suits.
Notwithstanding any other provision in this Indenture and any provision of any Security, the right
of any Holder of any Security to receive payment of the principal of and interest on such Security
on or after the respective due dates expressed in such Security, or to institute suit for the
enforcement of any such payment on or after such respective dates, or for the enforcement of such
conversion right, shall not be impaired or affected without the consent of such Holder.

     Section 5.08 Powers and Remedies Cumulative; Delay or Omission Not Waiver of Default. Except
as provided in Section 5.06, no right or remedy herein conferred upon or reserved to the Trustee or
to the Holders of Securities is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in addition to every
other right and remedy given hereunder or now or hereafter existing at law or in equity or
otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not
prevent the concurrent assertion or employment of any other appropriate right or remedy.

     No delay or omission of the Trustee or of any Holder of Securities to exercise any right or
power accruing upon any Event of Default occurring and continuing as aforesaid shall impair any
such right or power or shall be construed to be a waiver of any such Event of Default or an
acquiescence therein; and, subject to Section 5.06, every power and remedy given by this Indenture
or by law to the Trustee or to the Holders of Securities may be exercised from time to time, and as
often as shall be deemed expedient, by the Trustee or by the Holders of Securities.

     Section 5.09 Control by Holders of Securities. The Holders of a majority in aggregate
principal amount of the Securities of each series affected (with each series voting as a separate
class) at the time Outstanding shall 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

23

 

power conferred on the Trustee with respect to the Securities of such series by this
Indenture; provided, that such direction shall not be otherwise than in accordance with law and the
provisions of this Indenture and provided, further, that (subject to the provisions of Section
6.01) the Trustee shall have the right to decline to follow any such direction if the Trustee,
being advised by counsel, shall determine that the action or proceeding so directed may not
lawfully be taken or if the Trustee in good faith by its board of directors, the executive
committee, or a trust committee of directors or Responsible Officers of the Trustee shall determine
that the action or proceedings so directed would involve the Trustee in personal liability or if
the Trustee in good faith shall so determine that the actions or forbearances specified in or
pursuant to such direction would be unduly prejudicial to the interests of Holders of the
Securities of all series so affected not joining in the giving of said direction, it being
understood that (subject to Section 6.01) the Trustee shall have no duty to ascertain whether or
not such actions or forbearances are unduly prejudicial to such Holders.

     Nothing in this Indenture shall impair the right of the Trustee in its discretion to take any
action deemed proper by the Trustee and which is not inconsistent with such direction or directions
by Securityholders.

     Section 5.10 Waiver of Past Defaults. Prior to the declaration of the acceleration of the
maturity of the Securities of any series as provided in Section 5.01, the Holders of a majority in
aggregate principal amount of the Securities of such series at the time Outstanding may on behalf
of the Holders of all the Securities of such series waive any past default in the performance of
any of the covenants contained herein or established pursuant to Section 2.03 with respect to such
series and its consequences, except an uncured default in the payment of the principal of (or
premium, if any), or interest on, any of the Securities of that series as and when the same shall
become due by the terms of such Securities. In the case of any such waiver, the Issuer, the
Trustee and the Holders of the Securities of such series shall be restored to their former
positions and rights hereunder, respectively; but no such waiver shall extend to any subsequent or
other default or impair any right consequent thereon.

     Upon any such waiver, such default shall cease to exist and be deemed to have been cured and
not to have occurred, and any Event of Default arising therefrom shall be deemed to have been
cured, and not to have occurred for every purpose of this Indenture; but no such waiver shall
extend to any subsequent or other default or Event of Default or impair any right consequent
thereon.

     Section 5.11 Trustee to Give Notice of Default. The Trustee shall, within 90 days after the
occurrence of a default with respect to the Securities of any series, give notice of all defaults
with respect to that series known to the Trustee to all Holders of Securities of such series in the
manner and to the extent provided in Section 4.03, unless in each case such defaults shall have
been cured before the mailing or publication of such notice (the term “defaults” for the purpose of
this Section being hereby defined to mean any event or condition which is, or with notice or lapse
of time or both would become, an Event of Default); provided, that, except in the case of default
in the payment of the principal of or interest on any of the Securities of such series, or in the
payment of any sinking fund installment on such series, the Trustee shall be protected in
withholding such notice if and so long as the board of directors, the executive committee, or a
trust committee of directors or trustees and/or Responsible Officers of the Trustee in good faith

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determines that the withholding of such notice is in the interests of the Securityholders of
such series.

     Section 5.12 Right of Court to Require Filing of Undertaking to Pay Costs. All parties to
this Indenture agree, and each Holder of any Security by his or her acceptance thereof shall be
deemed to have agreed, that any court may in its discretion require, 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, suffered or omitted by it as Trustee, the filing by any party litigant in such suit
of an undertaking to pay the costs of such suit, and that such court may in its discretion assess
reasonable costs, including reasonable attorneys’ fees, against any party litigant in such suit,
having due regard to the merits and good faith of the claims or defenses made by such party
litigant; but the provisions of this Section shall not apply to any suit instituted by the Trustee,
to any suit instituted by any Securityholder or group of Securityholders of any series holding in
the aggregate more than 10% in aggregate principal amount of the Securities of such series, or to
any suit instituted by any Securityholder for the enforcement of the payment of the principal of
(or premium, if any) or interest on any Security of such series, on or after the respective due
dates expressed in such Security or established pursuant to this Indenture.

ARTICLE 6

CONCERNING THE TRUSTEE

     Section 6.01 Duties and Responsibilities of the Trustee; During Default; Prior to Default.
With respect to the Holders of any series of Securities issued hereunder, the Trustee, prior to the
occurrence of an Event of Default with respect to the Securities of a particular series and after
the curing or waiving of all Events of Default which may have occurred with respect to such series,
undertakes to perform such duties and only such duties as are specifically set forth in this
Indenture. In case an Event of Default with respect to the Securities of a series has occurred
(which has not been cured or waived), 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 their exercise, as a
prudent person would exercise or use under the circumstances in the conduct of his or her own
affairs.

     No provision of this Indenture shall be construed to relieve the Trustee from liability for
its own negligent action, its own negligent failure to act or its own willful misconduct.

     Section 6.02 Certain Rights of the Trustee. In furtherance of and subject to the Trust
Indenture Act of 1939 and subject to Section 6.01:

     (a) in the absence of bad faith on the part of the Trustee, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of the opinions
expressed therein, upon any statements, certificates or opinions furnished to the Trustee
and conforming to the requirements of this Indenture; but, in the case of any such
statements, certificates or opinions which by any provision hereof are specifically required
to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to
determine whether or not they conform to the requirements of this Indenture;

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     (b) the Trustee shall not be liable for any error of judgment made in good faith by a
Responsible Officer or Responsible Officers of the Trustee, unless it shall be proved that
the Trustee was negligent in ascertaining the pertinent facts;

     (c) the Trustee shall not be liable with respect to any action taken or omitted to be
taken by it in good faith in accordance with the direction of the Holders pursuant to
Section 5.09 relating to the time, method and place of conducting any proceeding for any
remedy available to the Trustee, or exercising any trust or power conferred upon the
Trustee, under this Indenture;

     (d) none of the provisions contained in this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur personal financial liability in the
performance of any of its duties or in the exercise of any of its rights or powers if there
shall be reasonable ground for believing that the repayment of such funds or adequate
indemnity against such liability is not reasonably assured to it;

     (e) the Trustee may rely and shall be protected in acting or refraining from acting
upon any resolution, Officer’s Certificate or any other certificate, statement, instrument,
opinion, report, notice, request, consent, order, bond, debenture, note, security or other
paper or document believed by it to be genuine and to have been signed or presented by the
proper party or parties;

     (f) any request, direction, order or demand of the Issuer mentioned herein shall be
sufficiently evidenced by an Officer’s Certificate (unless other evidence in respect thereof
be herein specifically prescribed); and any resolution of the Board of Directors may be
evidenced to the Trustee by a copy thereof certified by the secretary or an assistant
secretary of the Issuer;

     (g) the Trustee may consult with counsel and any advice or Opinion of Counsel shall be
full and complete authorization and protection in respect of any action taken, suffered or
omitted to be taken by it hereunder in good faith and in accordance with such advice or
Opinion of Counsel;

     (h) the Trustee shall be under no obligation to exercise any of the trusts or powers
vested in it by this Indenture at the request, order or direction of any of the
Securityholders pursuant to the provisions of this Indenture, unless such Securityholders
shall have offered to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities which might be incurred therein or thereby;

     (i) the Trustee shall not be liable for any action taken or omitted by it in good faith
and believed by it to be authorized or within the discretion, rights or powers conferred
upon it by this Indenture;

     (j) prior to the occurrence of an Event of Default hereunder and after the curing or
waiving of all Events of Default, the Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, approval, appraisal, bond, debenture,
note, security, or other paper or document unless requested in writing so to do

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by the Holders of not less than a majority in aggregate principal amount of the
Securities of all series affected then Outstanding; provided, that, if the payment within a
reasonable time to the Trustee of the costs, expenses or liabilities likely to be incurred
by it in the making of such investigation is, in the opinion of the Trustee, not reasonably
assured to the Trustee by the security afforded to it by the terms of this Indenture, the
Trustee may require reasonable indemnity against such expenses or liabilities as a condition
to proceeding; the reasonable expenses of every such investigation shall be paid by the
Issuer or, if paid by the Trustee or any predecessor trustee, shall be repaid by the Issuer
upon demand; and

     (k) the Trustee may execute any of the trusts or powers hereunder or perform any duties
hereunder either directly or by or through agents or attorneys not regularly in its employ
and the Trustee shall not be responsible for any misconduct or negligence on the part of any
such agent or attorney appointed with due care by it hereunder.

     Section 6.03 Trustee Not Responsible for Recitals, Disposition of Securities or Application of
Proceeds Thereof. The recitals contained herein and in the Securities, except the Trustee’s
certificates of authentication, shall be taken as the statements of the Issuer, and the Trustee
assumes no responsibility for the correctness of the same. The Trustee makes no representation as
to the validity or sufficiency of this Indenture or of the Securities. The Trustee shall not be
accountable for the use or application by the Issuer of any of the Securities or of the proceeds
thereof.

     Section 6.04 Trustee and Agents May Hold Securities; Collections, Etc. The Trustee or any
agent of the Issuer or the Trustee, in its individual or any other capacity, may become the owner
or pledgee of Securities with the same rights it would have if it were not the Trustee or such
agent and may otherwise deal with the Issuer and receive, collect, hold and retain collections from
the Issuer with the same rights it would have if it were not the Trustee or such agent.

     Section 6.05 Moneys Held by Trustee. Subject to the provisions of Section 10.04 hereof, all
moneys received by the Trustee shall, until used or applied as herein provided, be held in trust
for the purposes for which they were received, but need not be segregated from other funds except
to the extent required by mandatory provisions of law. Neither the Trustee nor any agent of the
Issuer or the Trustee shall be under any liability for interest on any moneys received by it
hereunder.

     Section 6.06 Compensation and Indemnification of Trustee and Its Prior Claim. The Issuer
covenants and agrees to pay to the Trustee from time to time, and the Trustee shall be entitled to,
such reasonable compensation (which shall not be limited by any provision of law in regard to the
compensation of a trustee of an express trust) as the Issuer and the Trustee may from time to time
agree in writing and, except as otherwise expressly provided herein, the Issuer covenants and
agrees to pay or reimburse the Trustee and each predecessor trustee upon its request for all
reasonable expenses, disbursements and advances incurred or made by or on behalf of it in
accordance with any of the provisions of this Indenture (including the reasonable compensation and
the expenses and disbursements of its counsel and of all agents and other persons not regularly in
its employ) except any such expense, disbursement or advance as may

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arise from its negligence or bad faith. The Issuer also covenants to indemnify the Trustee
and each predecessor trustee for, and to hold it harmless against, any loss, liability or expense
incurred without negligence or bad faith on its part, arising out of or in connection with the
acceptance or administration of this Indenture or the trusts hereunder and its duties hereunder,
including the costs and expenses of defending itself against or investigating any claim of
liability in the premises. The obligations of the Issuer under this Section to compensate and
indemnify the Trustee and each predecessor trustee and to pay or reimburse the Trustee and each
predecessor trustee for expenses, disbursements and advances shall constitute additional
indebtedness hereunder and shall survive the satisfaction and discharge of this Indenture. Such
additional indebtedness shall be a senior claim to that of the Securities upon all property and
funds held or collected by the Trustee as such, except funds held in trust for the benefit of the
Holders of particular Securities, and the Securities are hereby subordinated to such senior claim.

     Section 6.07 Right of Trustee to Rely on Officer’s Certificate, Etc. Subject to Sections 6.01
and 6.02, whenever in the administration of the trusts of this Indenture the Trustee shall deem it
necessary or desirable that a matter be proved or established prior to taking or suffering or
omitting any action hereunder, such matter (unless other evidence in respect thereof be herein
specifically prescribed) may, in the absence of negligence or bad faith on the part of the Trustee,
be deemed to be conclusively proved and established by an Officer’s Certificate delivered to the
Trustee, and such certificate, in the absence of negligence or bad faith on the part of the
Trustee, shall be full warrant to the Trustee for any action taken, suffered or omitted by it under
the provisions of this Indenture upon the faith thereof.

     Section 6.08 Disqualification; Conflicting Interests. If the Trustee has or shall acquire any
“conflicting interest” within the meaning of Section 310(b) of the Trust Indenture Act, the Trustee
and the Issuer shall in all respects comply with the provisions of Section 310(b) of the Trust
Indenture Act.

     Section 6.09 Persons Eligible for Appointment as Trustee. The Trustee for each series of
Securities hereunder shall at all times be a corporation having a combined capital and surplus of
at least $50,000,000 and shall be eligible in accordance with the provisions of Section 310(a) of
the Trust Indenture Act of 1939. If such corporation publishes reports of condition at least
annually, pursuant to law or to the requirements of a Federal, State or District of Columbia
supervising or examining authority, then, for the purposes of this Section, the combined capital
and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth
in its most recent report of condition so published.

     Section 6.10 Resignation and Removal; Appointment of Successor Trustee. (a) The Trustee, or
any trustee or trustees hereafter appointed, may at any time resign with respect to one or more or
all series of Securities by giving written notice of resignation to the Issuer and by mailing
notice of such resignation to the Holders of then Outstanding Securities of each series affected at
their addresses as they shall appear on the Security register. Upon receiving such notice of
resignation, the Issuer shall promptly appoint a successor trustee or trustees with respect to the
applicable series by written instrument in duplicate, executed by authority of the Board of
Directors, one copy of which instrument shall be delivered to the resigning Trustee and one copy to
the successor trustee or trustees. If no successor trustee shall have been so appointed with
respect to any series and have accepted appointment within 30 days after the mailing of

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such notice of resignation, the resigning trustee may petition any court of competent
jurisdiction for the appointment of a successor trustee, or any Securityholder who has been a bona
fide Holder of a Security or Securities of the applicable series for at least six months may,
subject to the provisions of Section 5.12, on behalf of himself or herself and all others similarly
situated, petition any such court for the appointment of a successor trustee. Such court may
thereupon, after such notice, if any, as it may deem proper and prescribe, appoint a successor
trustee.

     (b) In case at any time any of the following shall occur:

     (i) the Trustee shall fail to comply with the provisions of Section 310(b) of
the Trust Indenture Act of 1939 with respect to any series of Securities after
written request therefor by the Issuer or by any Securityholder who has been a bona
fide Holder of a Security or Securities of such series for at least six months; or

     (ii) the Trustee shall cease to be eligible in accordance with the provisions
of Section 310(a) of the Trust Indenture Act of 1939 and shall fail to resign after
written request therefor by the Issuer or by any Securityholder; or

     (iii) the Trustee shall become incapable of acting with respect to any series
of Securities, or shall be adjudged a bankrupt or insolvent, or a receiver or
liquidator of the Trustee or of its property shall be appointed, or any public
officer shall take charge or control of the Trustee or of its property or affairs
for the purpose of rehabilitation, conservation or liquidation;

then, in any such case, (A) the Issuer may remove the Trustee with respect to the applicable series
of Securities and appoint a successor trustee for such series by written instrument, in duplicate,
executed by order of the Board of Directors of the Issuer, one copy of which instrument shall be
delivered to the Trustee so removed and one copy to the successor trustee, or, (B) subject to
Section 315(e) of the Trust Indenture Act of 1939, any Securityholder who has been a bona fide
Holder of a Security or Securities of such series for at least six months may on behalf of himself
or herself and all others similarly situated, petition any court of competent jurisdiction for the
removal of the Trustee and the appointment of a successor trustee with respect to such series. Such
court may thereupon, after such notice, if any, as it may deem proper and prescribe, remove the
Trustee and appoint a successor trustee.

     (c) The Holders of a majority in aggregate principal amount of the Securities of each
series at the time Outstanding may at any time remove the Trustee with respect to Securities
of such series and appoint a successor trustee with respect to the Securities of such
series, with the consent of the Issuer, by delivering to the Trustee so removed, to the
successor trustee so appointed and to the Issuer the evidence provided for in Section 7.01
of the action in that regard taken by the Securityholders.

     (d) Any resignation or removal of the Trustee with respect to any series and any
appointment of a successor trustee with respect to such series pursuant to any of the
provisions of this Section 6.10 shall become effective upon acceptance of appointment by the
successor trustee as provided in Section 6.11.

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     Section 6.11 Acceptance of Appointment by Successor Trustee. Any successor trustee appointed
as provided in Section 6.10 shall execute and deliver to the Issuer and to its predecessor trustee
an instrument accepting such appointment hereunder, and thereupon the resignation or removal of the
predecessor trustee with respect to all or any applicable series shall become effective and such
successor trustee, without any further act, deed or conveyance, shall become vested with all
rights, powers, duties and obligations with respect to such series of its predecessor hereunder,
with like effect as if originally named as trustee for such series hereunder; but, nevertheless, on
the written request of the Issuer or of the successor trustee, upon payment of its charges then
unpaid, the trustee ceasing to act shall, subject to Section 10.04, pay over to the successor
trustee all moneys at the time held by it hereunder and shall execute and deliver an instrument
transferring to such successor trustee all such rights, powers, duties and obligations. Upon
request of any such successor trustee, the Issuer shall execute any and all instruments in writing
for more fully and certainly vesting in and confirming to such successor trustee all such rights
and powers. Any trustee ceasing to act shall, nevertheless, retain a prior claim upon all property
or funds held or collected by such trustee to secure any amounts then due it pursuant to the
provisions of Section 6.06.

     If a successor trustee is appointed with respect to the Securities of one or more (but not
all) series, the Issuer, the predecessor trustee and each successor trustee with respect to the
Securities of any applicable series shall execute and deliver an indenture supplemental hereto
which shall contain such provisions as shall be deemed necessary or desirable to confirm that all
the rights, powers, trusts and duties of the predecessor trustee with respect to the Securities of
any series as to which the predecessor trustee is not retiring shall continue to be vested in the
predecessor trustee, and shall add to or change any of the provisions of this Indenture as shall be
necessary to provide for or facilitate the administration of the trusts hereunder by more than one
trustee, it being understood that nothing herein or in such supplemental indenture shall constitute
such trustees co-trustees of the same trust and that each such trustee shall be trustee of a trust
or trusts under separate indentures.

     No successor trustee with respect to any series of Securities shall accept appointment as
provided in this Section 6.11 unless at the time of such acceptance such successor trustee shall be
qualified under the provisions of Section 310(b) of the Trust Indenture Act of 1939 and eligible
under the provisions of Section 310(a) of the Trust Indenture Act of 1939.

     Upon acceptance of appointment by any successor trustee as provided in this Section 6.11, the
Issuer shall mail notice thereof to the Holders of Securities of each series affected, by mailing
such notice to such Holders at their addresses as they shall appear on the Security register. If
the acceptance of appointment is substantially contemporaneous with the resignation, then the
notice called for by the preceding sentence may be combined with the notice called for by Section
6.10. If the Issuer fails to mail such notice within ten days after acceptance of appointment by
the successor trustee, the successor trustee shall cause such notice to be given at the expense of
the Issuer.

     Section 6.12 Merger, Conversion, Consolidation or Succession to Business of Trustee. Any
corporation into which the Trustee may be merged or converted or with which it may be consolidated,
or any corporation resulting from any merger, conversion or consolidation to which the Trustee
shall be a party, or any corporation succeeding to the corporate trust business of the

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Trustee, shall be the successor of the Trustee hereunder; provided, that such corporation
shall be qualified under the provisions of Section 310(b) of the Trust Indenture Act of 1939 and
eligible under the provisions of Section 310(a) of the Trust Indenture Act of 1939, without the
execution or filing of any paper or any further act on the part of any of the parties hereto,
anything herein to the contrary notwithstanding.

     In case, at the time such successor to the Trustee shall succeed to the trusts created by this
Indenture, any of the Securities of any series shall have been authenticated but not delivered, any
such successor to the Trustee may adopt the certificate of authentication of any predecessor
trustee and deliver such Securities so authenticated; and, in case at that time any of the
Securities of any series shall not have been authenticated, any successor to the Trustee may
authenticate such Securities either in the name of any predecessor hereunder or in the name of the
successor trustee; and in all such cases such certificate shall have the full force which it is
anywhere in the Securities of such series or in this Indenture provided that the certificate of the
Trustee shall have; provided, that the right to adopt the certificate of authentication of any
predecessor trustee or to authenticate Securities of any series in the name of any predecessor
trustee shall apply only to its successor or successors by merger, conversion or consolidation.

     Section 6.13 Preferential Collection of Claims Against the Issuer. The Trustee shall comply
with Section 311(a) of the Trust Indenture Act, excluding any creditor relationship described in
Section 311(b) of the Trust Indenture Act. A Trustee who has resigned or been removed shall be
subject to Section 311(a) of the Trust Indenture Act to the extent included therein.

ARTICLE 7

CONCERNING THE SECURITYHOLDERS

     Section 7.01 Evidence of Action Taken by Securityholders. Any request, demand, authorization,
direction, notice, consent, waiver or other action provided by this Indenture to be given or taken
by a specified percentage in principal amount of the Securityholders of any or all series may be
embodied in and evidenced by one or more instruments of substantially similar tenor signed by such
specified percentage of Securityholders in person or by agent duly appointed in writing; and,
except as herein otherwise expressly provided, such action shall become effective when such
instrument or instruments are delivered to the Trustee. Proof of execution of any instrument or of
a writing appointing any such agent shall be sufficient for any purpose of this Indenture and
(subject to Sections 6.01 and 6.02) conclusive in favor of the Trustee and the Issuer, if made in
the manner provided in this Article.

     Section 7.02 Proof of Execution of Instruments and of Holding of Securities. Subject to
Sections 6.01 and 6.02, the execution of any instrument by a Holder or his agent or proxy may be
proved in accordance with such reasonable rules and regulations as may be prescribed by the Trustee
or in such manner as shall be satisfactory to the Trustee. The holding of Securities shall be
proved by the Security register or by a certificate of the registrar thereof. The Issuer may set a
record date for purposes of determining the identity of Holders of any series entitled to vote or
consent to any action referred to in Section 7.01, which record date may be set at any time or from
time to time by notice to the Trustee, for any date or dates (in the case of any adjournment or
reconsideration) not more than 60 days nor less than five days prior to the proposed date of

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such vote or consent, and thereafter, notwithstanding any other provisions hereof, only
Holders of such series of record on such record date shall be entitled to so vote or give such
consent or revoke such vote or consent. Notice of such record date may be given before or after
any request for any action referred to in Section 7.01 is made by the Issuer.

     Section 7.03 Holders to Be Treated as Owners. The Issuer, the Trustee and any agent of the
Issuer or the Trustee may deem and treat the Person in whose name any Security shall be registered
upon the Security register for such series as the absolute owner of such Security (whether or not
such Security shall be overdue and notwithstanding any notation of ownership or other writing
thereon) for the purpose of receiving payment of or on account of the principal of, and, subject to
the provisions of this Indenture, interest on, such Security and for all other purposes; and
neither the Issuer nor the Trustee nor any agent of the Issuer or the Trustee shall be affected by
any notice to the contrary. All such payments so made to any such Person, or upon his or her
order, shall be valid, and, to the extent of the sum or sums so paid, effectual to satisfy and
discharge the liability for moneys payable.

     Section 7.04 Securities Owned by Issuer Deemed Not Outstanding. In determining whether the
Holders of the requisite aggregate principal amount of Outstanding Securities of any or all series
have concurred in any direction, consent or waiver under this Indenture, Securities which are owned
by the Issuer or any other obligor on the Securities with respect to which such determination is
being made or by any Person directly or indirectly controlling or controlled by or under direct or
indirect common control with the Issuer or any other obligor on the Securities with respect to
which such determination is being made shall be disregarded and deemed not to be Outstanding for
the purpose of any such determination, except that, for the purpose of determining whether the
Trustee shall be protected in relying on any such direction, consent or waiver, only Securities
which the Trustee knows are so owned shall be so disregarded. Securities so owned which have been
pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction
of the Trustee the pledgee’s right so to act with respect to such Securities and that the pledgee
is not the Issuer or any other obligor upon the Securities or any Person directly or indirectly
controlling or controlled by or under direct or indirect common control with the Issuer or any
other obligor on the Securities. In case of a dispute as to such right, the advice of counsel
shall be full protection in respect of any decision made by the Trustee in accordance with such
advice.

     Section 7.05 Right of Revocation of Action Taken. At any time prior to (but not after) the
evidencing to the Trustee, as provided in Section 7.01, of the taking of any action by the Holders
of the percentage in aggregate principal amount of the Securities of any or all series, as the case
may be, specified in this Indenture in connection with such action, any Holder of a Security the
serial number of which is shown by the evidence to be included among the serial numbers of the
Securities the Holders of which have consented to such action may, by filing written notice at the
Corporate Trust Office and upon proof of holding as provided in this Article, revoke such action so
far as concerns such Security. Except as aforesaid, any such action taken by the Holder of any
Security shall be conclusive and binding upon such Holder and upon all future Holders and owners of
such Security and of any Securities issued in exchange or substitution therefor or on registration
of transfer thereof, irrespective of whether or not any notation in regard thereto is made upon any
such Security. Any action taken by the Holders of the percentage in aggregate principal amount of
the Securities of any or all series, as the case

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may be, specified in this Indenture in connection with such action shall be conclusively
binding upon the Issuer, the Trustee and the Holders of all the Securities affected by such action.

ARTICLE 8

SUPPLEMENTAL INDENTURES

     Section 8.01 Supplemental Indentures Without Consent of Securityholders. The Issuer, when
authorized by a resolution of its Board of Directors, and the Trustee may from time to time and at
any time enter into an indenture or indentures supplemental hereto in form satisfactory to the
Trustee for one or more of the following purposes:

     (a) to convey, transfer, assign, mortgage or pledge to the Trustee as security for the
Securities of one or more series any property or assets;

     (b) to evidence the succession of another corporation to the Issuer, or successive
successions, and the assumption by the successor corporation of the covenants, agreements
and obligations of the Issuer pursuant to Article 9;

     (c) to add to the covenants of the Issuer such further covenants, restrictions,
conditions or provisions as its Board of Directors and the Trustee shall consider to be for
the protection of the Holders of Securities, and to make the occurrence, or the occurrence
and continuance, of a default in any such additional covenants, restrictions, conditions or
provisions an Event of Default permitting the enforcement of all or any of the several
remedies provided in this Indenture as herein set forth; provided, that in respect of any
such additional covenant, restriction, condition or provision such supplemental indenture
may provide for a particular period of grace after default (which period may be shorter or
longer than that allowed in the case of other defaults) or may provide for an immediate
enforcement upon such an Event of Default or may limit the remedies available to the Trustee
upon such an Event of Default or may limit the right of the Holders of a majority in
aggregate principal amount of the Securities of such series to waive such an Event of
Default;

     (d) to cure any ambiguity or to correct or supplement any provision contained herein or
in any supplemental indenture which may be defective or inconsistent with any other
provision contained herein or in any supplemental indenture, or to conform this Indenture or
any supplemental indenture to the description of the Securities set forth in any prospectus
or prospectus supplement related to such series of Securities;

     (e) to provide for or add guarantors for the Securities of one or more series;

     (f) to establish the form or terms of Securities of any series as permitted by Sections
2.01 and 2.03;

     (g) to evidence and provide for the acceptance of appointment hereunder by a successor
trustee with respect to the Securities of one or more series and to add to or change any of
the provisions of this Indenture as shall be necessary to provide for or facilitate the
administration of the trusts hereunder by more than one trustee, pursuant to the
requirements of Section 6.11;

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     (h) to add to, delete from or revise the conditions, limitations and restrictions on
the authorized amount, terms, purposes of issue, authentication and delivery of any series
of Securities, as herein set forth;

     (i) to make any change to the Securities of any series so long as no Securities of such
series are Outstanding; and

     (j) to make any other change that does not adversely affect the interests of the
Holders of the Securities in any material respect.

     The Trustee is hereby authorized to join with the Issuer in the execution of any such
supplemental indenture, to make any further appropriate agreements and stipulations which may be
therein contained and to accept the conveyance, transfer, assignment, mortgage or pledge of any
property thereunder, but the Trustee shall not be obligated to enter into any such supplemental
indenture which affects the Trustee’s own rights, duties or immunities under this Indenture or
otherwise.

     Any supplemental indenture authorized by the provisions of this Section may be executed
without the consent of the Holders of any of the Securities at the time Outstanding,
notwithstanding any of the provisions of Section 8.02.

     Section 8.02 Supplemental Indentures With Consent of Securityholders. With the consent
(evidenced as provided in Article 7) of the Holders of not less than a majority in aggregate
principal amount of the Securities at the time Outstanding of all series affected by such
supplemental indenture (voting as one class), the Issuer, when authorized by a resolution of its
Board of Directors, and the Trustee may, from time to time and at any time, enter into an indenture
or indentures supplemental hereto for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of this Indenture or of any supplemental indenture or
of modifying in any manner the rights of the Holders of the Securities of each such series;
provided, that no such supplemental indenture shall, without the consent of the Holder of each
Security so affected, (a) extend the final maturity of any Security, or reduce the principal amount
thereof, or reduce the rate or extend the time of payment of interest thereon, or reduce any amount
payable on redemption thereof, or make the principal thereof (including any amount in respect of
original issue discount) or interest thereon payable in any currency other than that provided in
the Securities or in accordance with the terms thereof, or reduce the amount of the principal of an
Original Issue Discount Security that would be due and payable upon an acceleration of the maturity
thereof pursuant to Section 5.01 or the amount thereof provable in bankruptcy pursuant to Section
5.02, or impair or affect the right of any Securityholder to institute suit for the payment or
conversion thereof or, if the Securities provide therefor, any right of repayment at the option of
the Securityholder, or modify any of the provisions of this paragraph except to increase any
required percentage or to provide that certain other provisions cannot be modified or waived
without the consent of the Holder of each Security so affected; provided, that no consent of any
Holder of any Security shall be necessary under this Section 8.02 to permit the Trustee and the
Issuer to execute supplemental indentures pursuant to Section 8.01(e) of this Indenture, or (b)
reduce the aforesaid percentage of Securities of any series, the consent of the Holders of which is
required for any such supplemental indenture.

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     A supplemental indenture which changes or eliminates any covenant or other provision of this
Indenture which has expressly been included solely for the benefit of one or more particular series
of Securities, or which modifies the rights of Holders of Securities of such series with respect to
such covenant or provision, shall be deemed not to affect the rights under this Indenture of the
Holders of Securities of any other series.

     Upon the request of the Issuer, accompanied by a copy of a resolution of the Board of
Directors certified by the secretary or an assistant secretary of the Issuer authorizing the
execution of any such supplemental indenture, and upon the filing with the Trustee of evidence of
the consent of Securityholders as aforesaid and other documents, if any, required by Section 7.01,
the Trustee shall join with the Issuer in the execution of such supplemental indenture unless such
supplemental indenture affects the Trustee’s own rights, duties or immunities under this Indenture
or otherwise, in which case the Trustee may in its discretion, but shall not be obligated to, enter
into such supplemental indenture.

     It shall not be necessary for the consent of the Securityholders under this Section to approve
the particular form of any proposed supplemental indenture, but it shall be sufficient if such
consent shall approve the substance thereof.

     Promptly after the execution by the Issuer and the Trustee of any supplemental indenture
pursuant to the provisions of this Section, the Trustee shall give a notice thereof to the Holders
of then Outstanding Securities of each series affected thereby, by mailing a notice thereof by
first-class mail to such Holders at their addresses as they shall appear on the Security register,
and in each case such notice shall set forth in general terms the substance of such supplemental
indenture. Any failure of the Issuer to mail such notice, or any defect therein, shall not,
however, in any way impair or affect the validity of any such supplemental indenture.

     Section 8.03 Effect of Supplemental Indenture. Upon the execution of any supplemental
indenture pursuant to the provisions hereof, this Indenture shall be and be deemed to be modified
and amended in accordance therewith and the respective rights, limitations of rights, obligations,
duties and immunities under this Indenture of the Trustee, the Issuer and the Holders of Securities
of each series affected thereby shall thereafter be determined, exercised and enforced hereunder
subject in all respects to such modifications and amendments, and all the terms and conditions of
any such supplemental indenture shall be and be deemed to be part of the terms and conditions of
this Indenture for any and all purposes.

     Section 8.04 Documents to Be Given to Trustee. The Trustee, subject to the provisions of
Sections 6.01 and 6.02, may receive an Officer’s Certificate and an Opinion of Counsel as
conclusive evidence that any supplemental indenture executed pursuant to this Article 8 complies
with the applicable provisions of this Indenture.

     Section 8.05 Notation on Securities in Respect of Supplemental Indentures. Securities of any
series authenticated and delivered after the execution of any supplemental indenture pursuant to
the provisions of this Article may bear a notation in form approved by the Trustee for such series
as to any matter provided for by such supplemental indenture or as to any action taken by
Securityholders. If the Issuer or the Trustee shall so determine, new Securities of any series so
modified as to conform, in the opinion of the Trustee and the Board of Directors, to any

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modification of this Indenture contained in any such supplemental indenture may be prepared by
the Issuer, authenticated by the Trustee and delivered in exchange for the Securities of such
series then Outstanding.

ARTICLE 9

CONSOLIDATION, MERGER, SALE OR CONVEYANCE

     Section 9.01 Issuer May Consolidate, Etc., on Certain Terms. The Issuer shall not consolidate
with or merge into any other Person (in a transaction in which the Issuer is not the surviving
corporation) or convey, transfer or lease its properties and assets substantially as an entirety to
any Person, unless (a) the Person formed by such consolidation or into which the Issuer is merged
or the Person which acquires by conveyance or transfer, or which leases, the properties and assets
of the Issuer substantially as an entirety shall be (i) a corporation, limited liability company,
partnership or trust, (ii) shall be organized and validly existing under the laws of the United
States of America, any State thereof or the District of Columbia and (iii) shall expressly assume,
by an indenture supplemental hereto, executed and delivered to the Trustee, in form satisfactory to
the Trustee, the due and punctual payment of the principal of and any premium and interest on all
the Securities and the performance or observance of every covenant of this Indenture on the part of
the Issuer to be performed, by supplemental indenture satisfactory in form to the Trustee, executed
and delivered to the Trustee, by the Person (if other than the Issuer) formed by such consolidation
or into which the Issuer shall have been merged or by the Person which shall have acquired the
Issuer’s assets; (b) immediately after giving effect to such transaction and treating any
indebtedness which becomes an obligation of the Issuer or any Subsidiary as a result of such
transaction as having been incurred by the Issuer or such Subsidiary at the time of such
transaction, no Event of Default, and no event which, after notice or lapse of time or both, would
become an Event of Default, shall have happened and be continuing; and (c) the Issuer has delivered
to the Trustee an Officer’s Certificate and an Opinion of Counsel, each stating that such
consolidation, merger, conveyance, transfer or lease and, if a supplemental indenture is required
in connection with such transaction, such supplemental indenture comply with this Article and that
all conditions precedent herein provided for relating to such transaction have been complied with.

     The conditions of (a)(ii) above shall not apply in the case of a corporation or entity not
organized under the laws of the United States of America, any State thereof or the District of
Columbia which shall agree, in form satisfactory to the Trustee, (i) to subject itself to the
jurisdiction of the United States district court for the Southern District of New York and (ii) to
indemnify and hold harmless the holders of all Securities against (A) any tax, assessment or
governmental charge imposed on such holders by a jurisdiction other than the United States or any
political subdivision or taxing authority thereof or therein with respect to, and withheld on the
making of, any payment of principal or interest on such Securities and which would not have been so
imposed and withheld had such consolidation, merger, sale or conveyance not been made and (B) any
tax, assessment or governmental charge imposed on or relating to, and any costs or expenses
involved in, such consolidation, merger, sale or conveyance.

     The restrictions in this Section 9.01 shall not apply to the merger or consolidation of the
Issuer with one of its affiliates, if the Board of Directors determines in good faith that the

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purpose of such transaction is principally to change the Issuer’s State of incorporation or
convert the Issuer’s form of organization to another form.

     Nothing contained in this Article shall apply to, limit or impose any requirements upon the
consolidation or merger of any Person into the Issuer where the Issuer is the survivor of such
transaction, or the acquisition by the Issuer, by purchase or otherwise, of all or any part of the
property of any other Person (whether or not affiliated with the Issuer).

     Section 9.02 Successor Issuer Substituted. Upon any consolidation of the Issuer with, or
merger of the Issuer into, any other Person or any conveyance, transfer or lease of the properties
and assets of the Issuer substantially as an entirety in accordance with Section 9.01, the
successor Person formed by such consolidation or into which the Issuer is merged or to which such
conveyance, transfer or lease is made shall succeed to, and be substituted for, and may exercise
every right and power of, the Issuer under this Indenture with the same effect as if such successor
Person had been named as the Issuer herein, and thereafter, except in the case of a lease, the
predecessor Person shall be relieved of all obligations and covenants under this Indenture and the
Securities.

     In case of any such consolidation, merger, sale, lease or conveyance, such changes in
phraseology and form (but not in substance) may be made in the Securities thereafter to be issued
as may be appropriate.

ARTICLE 10

SATISFACTION AND DISCHARGE OF INDENTURE; UNCLAIMED MONEYS

     Section 10.01 Satisfaction and Discharge of Indenture. (a) If at any time (i) the Issuer
shall have paid or caused to be paid the principal of and interest on all the Securities of any
series Outstanding hereunder (other than Securities of such series which have been destroyed, lost
or stolen and which have been replaced or paid as provided in Section 2.09) as and when the same
shall have become due and payable, or (ii) the Issuer shall have delivered to the Trustee for
cancellation all Securities of any series theretofore authenticated (other than any Securities of
such series which shall have been destroyed, lost or stolen and which shall have been replaced or
paid as provided in Section 2.09) or (iii) in the case of any series of Securities the exact amount
(including the currency of payment) of principal of and interest due on which on the dates referred
to in clause (B) below can be determined at the time of making the deposit referred to in such
clause, (A) all the Securities of such series not theretofore delivered to the Trustee for
cancellation shall have become due and payable, or are by their terms to become due and payable
within one year or are to be called for redemption within one year under arrangements satisfactory
to the Trustee for the giving of notice of redemption, and (B) the Issuer shall have irrevocably
deposited or caused to be deposited with the Trustee as trust funds the entire amount in cash
(other than moneys repaid by the Trustee or any paying agent to the Issuer in accordance with
Section 10.04) or, in the case of any series of Securities the payments on which may only be made
in Dollars, direct obligations of the United States of America, backed by its full faith and credit
(“U.S. Government Obligations”), maturing as to principal and interest in such amounts and at such
times as will insure the availability of cash sufficient to pay on any subsequent interest payment
date all interest due on such interest payment date on the Securities of such series and to pay at
maturity or upon redemption all Securities of such series (in each case other

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than any Securities of such series which shall have been destroyed, lost or stolen and which
shall have been replaced or paid as provided in Section 2.09) not theretofore delivered to the
Trustee for cancellation, including principal and interest due or to become due to such date of
maturity, as the case may be, and if, in any such case, the Issuer shall also pay or cause to be
paid all other sums payable hereunder by the Issuer, including amounts due the Trustee pursuant to
Section 6.06, with respect to Securities of such series, then this Indenture shall cease to be of
further effect with respect to Securities of such series (except as to (1) rights of registration
of transfer, conversion and exchange of Securities of such series and the Issuer’s right of
optional redemption, (2) substitution of mutilated, defaced, destroyed, lost or stolen Securities,
(3) rights of Holders of Securities to receive payments of principal thereof and interest thereon
upon the original stated due dates therefor (but not upon acceleration) and remaining rights of the
Holders to receive mandatory sinking fund payments, if any, (4) the rights (including the Trustee’s
rights under Section 10.05) and immunities of the Trustee hereunder and the Trustee’s obligations
under Sections 10.02 and 10.04, (5) the rights of the Holders of Securities of such series as
beneficiaries hereof with respect to the property so deposited with the Trustee payable to all or
any of them and (6) the obligations of the Issuer under Section 3.02), and the Trustee, on demand
of the Issuer accompanied by an Officer’s Certificate and an Opinion of Counsel which complies with
Section 11.05 and at the cost and expense of the Issuer, shall execute proper instruments
acknowledging such satisfaction of and discharging this Indenture with respect to such series;
provided, that the rights of Holders of the Securities to receive amounts in respect of principal
of and interest on the Securities held by them shall not be delayed longer than required by then-
applicable mandatory rules or policies of any securities exchange upon which the Securities are
listed. The Issuer agrees to reimburse the Trustee for any costs or expenses thereafter reasonably
and properly incurred and to compensate the Trustee for any services thereafter reasonably and
properly rendered by the Trustee in connection with this Indenture or the Securities of such
series.

     (b) The following provisions shall apply to the Securities of each series unless
specifically otherwise provided in a Board Resolution, Officer’s Certificate or indenture
supplemental hereto provided pursuant to Section 2.03. In addition to discharge of the
Indenture pursuant to the next preceding paragraph, in the case of any series of Securities
the exact amounts (including the currency of payment) of principal of and interest
subsequently due on which can be determined at the time of making the deposit referred to in
clause (A)(1) below, the Issuer shall be deemed to have paid and discharged the entire Debt
on all the Securities of such a series on the 121st day after the date of the deposit
referred to in clause (A)(1) below, and the provisions of this Indenture with respect to the
Securities of such series shall no longer be in effect (except as to (i) rights of
registration of transfer, conversion and exchange of Securities of such series, (ii)
substitution of apparently mutilated, defaced, destroyed, lost or stolen Securities, (iii)
rights of Holders of Securities to receive payments of principal thereof and interest
thereon, upon the original stated due dates therefor (but not upon acceleration) and
remaining rights of the Holders to receive sinking fund payments, if any, (iv) the rights
(including the Trustee’s rights under Section 10.05) and immunities of the Trustee hereunder
and the Trustee’s obligations with respect to the Securities of such series under Sections
10.02 and 10.04, (v) the rights of the Holders of Securities of such series as beneficiaries
hereof with respect to the property so deposited with the Trustee payable to all or any of
them and (vi) the obligations of the Issuer under Section 3.02) and the

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Trustee, at the expense of the Issuer, shall at the Issuer’s request, execute proper
instruments acknowledging the same, if

     (A) with reference to this provision the Issuer has irrevocably
deposited or caused to be irrevocably deposited with the Trustee as trust
funds in trust, specifically pledged as security for, and dedicated solely
to, the benefit of the Holders of the Securities of such series (1) cash in
an amount, or (2) in the case of any series of Securities the payments on
which may only be made in Dollars, U.S. Government Obligations, maturing as
to principal and interest at such times and in such amounts as will insure
the availability of cash or (3) a combination thereof, sufficient, in the
opinion of a nationally recognized firm of independent public accountants
expressed in a written certification thereof delivered to the Trustee, to
pay (x) the principal and interest on all Securities of such series on the
date that such principal or interest is due and payable and (y) any
mandatory sinking fund payments on the day on which such payments are due
and payable in accordance with the terms of the Indenture and the Securities
of such series;

     (B) such deposit will not result in a breach or violation of, or
constitute a default under, any agreement or instrument to which the Issuer
is a party or by which it is bound;

     (C) the Issuer has delivered to the Trustee an Officer’s Certificate
and an opinion of independent legal counsel satisfactory to the Trustee to
the effect that the Issuer has received from, or there has been published
by, the Internal Revenue Service a ruling to the effect that Holders of the
Securities of such series will not recognize income, gain or loss for
Federal income tax purposes as a result of such deposit, defeasance and
discharge and will be subject to Federal income tax on the same amount and
in the same manner and at the same times, as would have been the case if
such deposit, defeasance and discharge had not occurred; and

     (D) the Issuer has delivered to the Trustee an Officer’s Certificate
and an Opinion of Counsel, each stating that all conditions precedent
provided for relating to the defeasance contemplated by this provision have
been complied with, and the Opinion of Counsel shall also state that such
deposit does not violate applicable law.

     Section 10.02 Application by Trustee of Funds Deposited for Payment of Securities. Subject to
Section 10.04, all moneys deposited with the Trustee (or other trustee) pursuant to Section 10.01
shall be held in trust and applied by it to the payment, either directly or through any paying
agent (including the Issuer acting as its own paying agent), to the Holders of the particular
Securities of such series for the payment or redemption of which such moneys have been deposited
with the Trustee, of all sums due and to become due thereon for principal and

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interest; but such money need not be segregated from other funds except to the extent required
by law.

     Section 10.03 Repayment of Moneys Held by Paying Agent. In connection with the satisfaction
and discharge of this Indenture with respect to Securities of any series, all moneys then held by
any paying agent under the provisions of this Indenture with respect to such series of Securities
shall, upon demand of the Issuer, be repaid to it or paid to the Trustee and thereupon such paying
agent shall be released from all further liability with respect to such moneys.

     Section 10.04 Return of Moneys Held by Trustee and Paying Agent Unclaimed for Two Years. Any
moneys deposited with or paid to the Trustee or any paying agent for the payment of the principal
of or interest on any Security of any series and not applied but remaining unclaimed for two years
after the date upon which such principal or interest shall have become due and payable, shall be
repaid to the Issuer by the Trustee for such series or such paying agent, and the Holder of the
Securities of such series shall thereafter look only to the Issuer for any payment which such
Holder may be entitled to collect, and all liability of the Trustee or any paying agent with
respect to such moneys shall thereupon cease.

     Section 10.05 Indemnity for U.S. Government Obligations. The Issuer shall pay and indemnify
the Trustee against any tax, fee or other charge imposed on or assessed against the U.S. Government
Obligations deposited pursuant to Section 10.01 or the principal or interest received in respect of
such obligations.

ARTICLE 11

MISCELLANEOUS PROVISIONS

     Section 11.01 No Recourse. No recourse under or upon any obligation, covenant or agreement of
this Indenture, or of any Security, or for any claim based thereon or otherwise in respect thereof,
shall be had against any incorporator, stockholder, officer or director, past, present or future as
such, of the Issuer or of any predecessor or successor corporation, either directly or through the
Issuer or any such predecessor or successor corporation, whether by virtue of any constitution,
statute or rule of law, or by the enforcement of any assessment or penalty or otherwise; it being
expressly understood that this Indenture and the obligations issued hereunder are solely corporate
obligations, and that no such personal liability whatever shall attach to, or is or shall be
incurred by, the incorporators, stockholders, officers or directors as such, of the Issuer or of
any predecessor or successor corporation, or any of them, because of the creation of the
indebtedness hereby authorized, or under or by reason of the obligations, covenants or agreements
contained in this Indenture or in any of the Securities or implied therefrom; and that any and all
such personal liability of every name and nature, either at common law or in equity or by
constitution or statute, of, and any and all such rights and claims against, every such
incorporator, stockholder, officer or director as such, because of the creation of the indebtedness
hereby authorized, or under or by reason of the obligations, covenants or agreements contained in
this Indenture or in any of the Securities or implied therefrom, are hereby expressly waived and
released as a condition of, and as a consideration for, the execution of this Indenture and the
issuance of such Securities.

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     Section 11.02 Provisions of Indenture for the Sole Benefit of Parties and Holders of
Securities. Nothing in this Indenture or in the Securities, expressed or implied, shall give or be
construed to give to any person, firm or corporation, other than the parties hereto and their
successors and the Holders of the Securities any legal or equitable right, remedy or claim under
this Indenture or under any covenant or provision herein contained, all such covenants and
provisions being for the sole benefit of the parties hereto and their successors and of the Holders
of the Securities.

     Section 11.03 Successors and Assigns of Issuer Bound by Indenture. All the covenants,
stipulations, promises and agreements contained in this Indenture by or on behalf of the Issuer
shall bind its successors and assigns, whether so expressed or not.

     Section 11.04 Notices and Demands on Issuer, Trustee and Holders of Securities. Any notice or
demand which by any provision of this Indenture is required or permitted to be given or served by
the Trustee or by the Holders of Securities to or on the Issuer may be given or served by being
deposited postage prepaid, first-class mail (except as otherwise specifically provided herein)
addressed (until another address of the Issuer is filed by the Issuer with the Trustee) to PS
Business Parks, Inc., 701 Western Avenue, Glendale, California 91201-2397, Attn: Chief Financial
Officer. Any notice, direction, request or demand by the Issuer or any Holder of Securities to or
upon the Trustee shall be deemed to have been sufficiently given or made, for all purposes, if
given or made at                     ,                     , Attn:                     .

     Where this Indenture provides for notice to Holders of Securities, such notice shall be
sufficiently given (unless otherwise herein expressly provided) if in writing and mailed,
first-class postage prepaid, to each Holder entitled thereto, at his or her last address as it
appears in the Security register. In any case where notice to such Holders is given by mail,
neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular
Holder shall affect the sufficiency of such notice with respect to other Holders.

     In case, by reason of the suspension of or irregularities in regular mail service, it shall be
impracticable to mail notice to the Issuer when such notice is required to be given pursuant to any
provision of this Indenture, then any manner of giving such notice as shall be satisfactory to the
Trustee shall be deemed to be a sufficient giving of such notice.

     In case, by reason of the suspension of or irregularities in regular mail service, it shall be
impracticable to mail notice of any event to Holders of Securities when said notice is required to
be given pursuant to any provision of this Indenture or of the Securities, then any manner of
giving such notice as shall be satisfactory to the Trustee shall be deemed to be a sufficient
giving of such notice. Neither the failure to give notice, nor any defect in any notice so given,
to any particular Holder of a Security shall affect the sufficiency of such notice with respect to
other Holders of Securities given as provided above.

     Where this Indenture provides for notice in any manner, such notice may be waived in writing
by the Person entitled to receive such notice either before or after the event, and such waiver
shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with the
Trustee, but such filing shall not be a condition precedent to the validity of any action taken in
reliance upon such waiver.

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     Section 11.05 Officer’s Certificates and Opinions of Counsel; Statements to Be Contained
Therein. Upon any application or demand by the Issuer to the Trustee to take any action under any
of the provisions of this Indenture, the Issuer shall furnish to the Trustee an Officer’s
Certificate stating that all conditions precedent provided for in this Indenture relating to the
proposed action have been complied with and an Opinion of Counsel stating that in the opinion of
such counsel all such conditions precedent have been complied with, except that in the case of any
such application or demand as to which the furnishing of such documents is specifically required by
any provision of this Indenture relating to such particular application or demand, no additional
certificate or opinion need be furnished.

     Each certificate or opinion provided for in this Indenture and delivered to the Trustee with
respect to compliance with a condition or covenant provided for in this Indenture shall include (a)
a statement that the person making such certificate or opinion has read such covenant or condition,
(b) 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, (c) a statement that, in
the opinion of such person, he or she has made such examination or investigation as is necessary to
enable him or her to express an informed opinion as to whether or not such covenant or condition
has been complied with and (d) a statement as to whether or not, in the opinion of such person,
such condition or covenant has been complied with.

     Any certificate, statement or opinion of an officer of the Issuer may be based, insofar as it
relates to legal matters, upon a certificate or opinion of or representations by counsel, unless
such officer knows that the certificate or opinion or representations with respect to the matters
upon which his or her certificate, statement or opinion may be based as aforesaid are erroneous, or
in the exercise of reasonable care should know that the same are erroneous. Any certificate,
statement or opinion of counsel may be based, insofar as it relates to factual matters, information
with respect to which is in the possession of the Issuer, upon the certificate, statement or
opinion of or representations by an officer or officers of the Issuer, unless such counsel knows
that the certificate, statement or opinion or representations with respect to the matters upon
which his or her certificate, statement or opinion may be based as aforesaid are erroneous, or in
the exercise of reasonable care should know that the same are erroneous.

     Any certificate, statement or opinion of an officer of the Issuer or of counsel may be based,
insofar as it relates to accounting matters, upon a certificate or opinion of or representations by
an accountant or firm of accountants in the employ of the Issuer, unless such officer or counsel,
as the case may be, knows that the certificate or opinion or representations with respect to the
accounting matters upon which his or her certificate, statement or opinion may be based as
aforesaid are erroneous, or in the exercise of reasonable care should know that the same are
erroneous.

     Any certificate or opinion of any independent firm of public accountants filed with and
directed to the Trustee shall contain a statement that such firm is independent.

     Section 11.06 Payments Due on Saturdays, Sundays and Holidays. If the date of maturity of
interest on or principal of the Securities of any series or the date fixed for redemption or
repayment of any such Security, or the last day on which a Holder has the right to convert any
Security, shall not be a Business Day, then payment of interest or principal, or any conversion,

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need not be made on such date, but may be made on the next succeeding Business Day with the
same force and effect as if made on the date of maturity or the date fixed for redemption or on
such last day for conversion, and no interest shall accrue for the period after such date.

     Section 11.07 Conflict of Any Provision of Indenture With Trust Indenture Act of 1939. If and
to the extent that any provision of this Indenture limits, qualifies or conflicts with another
provision included in this Indenture by operation of Sections 310 to 317, inclusive, of the Trust
Indenture Act of 1939, such incorporated provision shall control.

     Section 11.08 New York Law to Govern. This Indenture and each Security shall be deemed to be
a contract under the laws of the State of New York, and for all purposes shall be construed in
accordance with the laws of such State, except as may otherwise be required by mandatory provisions
of law.

     Section 11.09 Counterparts. This Indenture may be executed in any number of counterparts,
each of which shall be an original; but such counterparts shall together constitute but one and the
same instrument.

     Section 11.10 Effect of Headings. The Article and Section headings herein and the Table of
Contents are for convenience only and shall not affect the construction hereof.

     Section 11.11 Actions by Successor. Any act or proceeding by any provision of this Indenture
authorized or required to be done or performed by any board, committee or officer of the Issuer
shall and may be done and performed with like force and effect by the corresponding board,
committee or officer of any corporation that shall at the time be the lawful successor of the
Issuer.

     Section 11.12 Severability. In case any one or more of the provisions contained in this
Indenture or in the Securities of any series shall for any reason be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any
other provisions of this Indenture or of such Securities, but this Indenture and such Securities
shall be construed as if such invalid or illegal or unenforceable provision had never been
contained herein or therein.

ARTICLE 12

REDEMPTION OF SECURITIES AND SINKING FUNDS

     Section 12.01 Applicability of Article. The provisions of this Article shall be applicable to
the Securities of any series which are redeemable before their maturity or to any sinking fund for
the retirement of Securities of a series, except as otherwise specified, as contemplated by Section
2.03 for Securities of such series.

     Section 12.02 Notice of Redemption; Partial Redemptions. Notice of redemption to the Holders
of Securities of any series to be redeemed as a whole or in part at the option of the Issuer shall
be given by mailing notice of such redemption by first class mail, postage prepaid, at least 30
days and not more than 60 days prior to the date fixed for redemption to such Holders of Securities
of such series at their last addresses as they shall appear upon the Security register. Any notice
which is given in the manner herein provided shall be conclusively presumed to have

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been duly given, whether or not the Holder receives the notice. Failure to give notice or any
defect in the notice to the Holder of any Security of a series designated for redemption as a whole
or in part shall not affect the validity of the proceedings for the redemption of any other
Security of such series.

     The notice of redemption to each such Holder shall specify the principal amount of each
Security of such series held by such Holder to be redeemed, the date fixed for redemption, the
redemption price, the place or places of payment, that payment will be made upon presentation and
surrender of such Securities, that such redemption is pursuant to the mandatory or optional sinking
fund, or both, if such be the case, that interest accrued to the date fixed for redemption will be
paid as specified in such notice and that on and after said date interest thereon or on the
portions thereof to be redeemed will cease to accrue and shall also specify, if applicable, the
conversion price then in effect and the date on which the right to convert such Securities or the
portions thereof to be redeemed will expire. In case any Security of a series is to be redeemed in
part only, the notice of redemption shall state the portion of the principal amount thereof to be
redeemed and shall state that on and after the date fixed for redemption, upon surrender of such
Security, a new Security or Securities of such series in principal amount equal to the unredeemed
portion thereof will be issued.

     The notice of redemption of Securities of any series to be redeemed at the option of the
Issuer shall be given by the Issuer or, at the Issuer’s request, by the Trustee in the name and at
the expense of the Issuer.

     On or before the redemption date specified in the notice of redemption given as provided in
this Section, the Issuer will deposit with the Trustee or with one or more paying agents (or, if
the Issuer is acting as its own paying agent, set aside, segregate and hold in trust as provided in
Section 3.04) an amount of money sufficient to redeem on the redemption date all the Securities of
such series so called for redemption (other than those theretofore surrendered for conversion into
Common Stock) at the appropriate redemption price, together with accrued interest to the date fixed
for redemption. If any Security called for redemption is converted pursuant hereto, any money
deposited with the Trustee or any paying agent or so segregated and held in trust for the
redemption of such Security shall be paid to the Issuer upon the Issuer’s request, or, if then held
by the Issuer, shall be discharged from such trust. The Issuer will deliver to the Trustee at
least 70 days prior to the date fixed for redemption (unless a shorter time period shall be
acceptable to the Trustee) an Officer’s Certificate (which need not comply with Section 11.05)
stating the aggregate principal amount of Securities to be redeemed. In case of a redemption at
the election of the Issuer prior to the expiration of any restriction on such redemption, the
Issuer shall deliver to the Trustee, prior to the giving of any notice of redemption to Holders
pursuant to this Section, an Officer’s Certificate stating that such restriction has been complied
with.

     If less than all the Securities of a series are to be redeemed, the Trustee shall select, in
such manner as it shall deem appropriate and fair, Securities of such series to be redeemed in
whole or in part. Securities may be redeemed in part in multiples equal to the minimum authorized
denomination for Securities of such series or any multiple thereof. The Trustee shall promptly
notify the Issuer in writing of the Securities of such series selected for redemption and, in the
case of any Securities of such series selected for partial redemption, the principal amount thereof
to be redeemed. For all purposes of this Indenture, unless the context otherwise requires,

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all provisions relating to the redemption of Securities of any series shall relate, in the
case of any Security redeemed or to be redeemed only in part, to the portion of the principal
amount of such Security which has been or is to be redeemed. If any Security selected for partial
redemption is surrendered for conversion after such selection, the converted portion of such
Security shall be deemed (so far as may be) to be the portion selected for redemption.

     Section 12.03 Payment of Securities Called for Redemption. If notice of redemption has been
given as above provided, the Securities or portions of Securities specified in such notice shall
become due and payable on the date and at the place stated in such notice at the applicable
redemption price, together with interest accrued to the date fixed for redemption, and on and after
said date (unless the Issuer shall default in the payment of such Securities at the redemption
price, together with interest accrued to said date) interest on the Securities or portions of
Securities so called for redemption shall cease to accrue, and, except as provided in Sections 6.05
and 10.04, such Securities shall cease from and after the date fixed for redemption to be
convertible into Common Stock, if applicable, and to be entitled to any benefit or security under
this Indenture, and the Holders thereof shall have no right in respect of such Securities except
the right to receive the redemption price thereof and unpaid interest to the date fixed for
redemption. On presentation and surrender of such Securities at a place of payment specified in
said notice, said Securities or the specified portions thereof shall be paid and redeemed by the
Issuer at the applicable redemption price, together with interest accrued thereon to the date fixed
for redemption; provided, that payment of interest becoming due on or prior to the date fixed for
redemption shall be payable to the Holders of such Securities registered as such on the relevant
record date subject to the terms and provisions of Sections 2.03 and 2.07 hereof.

     If any Security called for redemption shall not be so paid upon surrender thereof for
redemption, the principal shall, until paid or duly provided for, bear interest from the date fixed
for redemption at the rate of interest or Yield to Maturity (in the case of an Original Issue
Discount Security) borne by such Security and, if applicable, such Security shall remain
convertible into Common Stock until the principal of such Security shall have been paid or duly
provided for.

     Upon presentation of any Security redeemed in part only, the Issuer shall execute and the
Trustee shall authenticate and deliver to or on the order of the Holder thereof, at the expense of
the Issuer, a new Security or Securities of such series, of authorized denominations, in principal
amount equal to the unredeemed portion of the Security so presented.

     Section 12.04 Exclusion of Certain Securities from Eligibility for Selection for Redemption.
Securities shall be excluded from eligibility for selection for redemption if they are identified
by registration and certificate number in an Officer’s Certificate delivered to the Trustee at
least 40 days prior to the last date on which notice of redemption may be given as being owned of
record and beneficially by, and not pledged or hypothecated by either (a) the Issuer or (b) an
entity specifically identified in such written statement as directly or indirectly controlling or
controlled by or under direct or indirect common control with the Issuer.

     Section 12.05 Mandatory and Optional Sinking Funds. The minimum amount of any sinking fund
payment provided for by the terms of the Securities of any series is herein referred to as a
“mandatory sinking fund payment”, and any payment in excess of such minimum

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amount provided for by the terms of the Securities of any series is herein referred to as an
“optional sinking fund payment”. The date on which a sinking fund payment is to be made is herein
referred to as the “sinking fund payment date”.

     In lieu of making all or any part of any mandatory sinking fund payment with respect to any
series of Securities in cash, the Issuer may at its option (a) deliver to the Trustee Securities of
such series theretofore purchased or otherwise acquired (except upon redemption pursuant to the
mandatory sinking fund) by the Issuer or receive credit for Securities of such series (not
previously so credited) theretofore purchased or otherwise acquired (except as aforesaid) by the
Issuer and delivered to the Trustee for cancellation pursuant to Section 2.10 and, if applicable,
receive credit for Securities (not previously so credited) converted into Common Stock and so
delivered to the Trustee for cancellation, (b) receive credit for optional sinking fund payments
(not previously so credited) made pursuant to this Section, or (c) receive credit for Securities of
such series (not previously so credited) redeemed by the Issuer through any optional redemption
provision contained in the terms of such series. Securities so delivered or credited shall be
received or credited by the Trustee at the sinking fund redemption price specified in such
Securities.

     On or before the 60th day next preceding each sinking fund payment date for any series, the
Issuer will deliver to the Trustee an Officer’s Certificate (which need not contain the statements
required by Section 11.05) (a) specifying the portion of the mandatory sinking fund payment to be
satisfied by payment of cash and the portion to be satisfied by credit of Securities of such series
and the basis for such credit, (b) stating that none of the Securities of such series has
theretofore been so credited, (c) stating that no defaults in the payment of interest or Events of
Default with respect to such series have occurred (which have not been waived or cured) and are
continuing and (d) stating whether or not the Issuer intends to exercise its right to make an
optional sinking fund payment with respect to such series and, if so, specifying the amount of such
optional sinking fund payment which the Issuer intends to pay on or before the next succeeding
sinking fund payment date. Any Securities of such series to be credited and required to be
delivered to the Trustee in order for the Issuer to be entitled to credit therefor as aforesaid
which have not theretofore been delivered to the Trustee shall be delivered for cancellation
pursuant to Section 2.10 to the Trustee with such Officer’s Certificate (or reasonably promptly
thereafter if acceptable to the Trustee). Such Officer’s Certificate shall be irrevocable and upon
its receipt by the Trustee the Issuer shall become unconditionally obligated to make all the cash
payments or payments therein referred to, if any, on or before the next succeeding sinking fund
payment date. Failure of the Issuer, on or before any such 60th day, to deliver such Officer’s
Certificate and Securities specified in this paragraph, if any, shall not constitute a default but
shall constitute, on and as of such date, the irrevocable election of the Issuer that the mandatory
sinking fund payment for such series due on the next succeeding sinking fund payment date shall be
paid entirely in cash without the option to deliver or credit Securities of such series in respect
thereof.

     If the sinking fund payment or payments (mandatory or optional or both) to be made in cash on
the next succeeding sinking fund payment date plus any unused balance of any preceding sinking fund
payments made in cash shall exceed $50,000 (or the equivalent thereof in any Foreign Currency or a
lesser sum in Dollars or in any Foreign Currency if the Issuer shall so request) with respect to
the Securities of any particular series, such cash shall be applied on the

46

 

next succeeding sinking fund payment date to the redemption of Securities of such series at
the sinking fund redemption price together with accrued interest to the date fixed for redemption.
If such amount shall be $50,000 (or the equivalent thereof in any Foreign Currency) or less and the
Issuer makes no such request then it shall be carried over until a sum in excess of $50,000 (or the
equivalent thereof in any Foreign Currency) is available. The Trustee shall select, in the manner
provided in Section 12.02, for redemption on such sinking fund payment date a sufficient principal
amount of Securities of such series to absorb said cash, as nearly as may be, and shall (if
requested in writing by the Issuer) inform the Issuer of the serial numbers of the Securities of
such series (or portions thereof) so selected. The Trustee, in the name and at the expense of the
Issuer (or the Issuer, if it shall so request the Trustee in writing), shall cause notice of
redemption of the Securities of such series to be given in substantially the manner provided in
Section 12.02 (and with the effect provided in Section 12.03) for the redemption of Securities of
such series in part at the option of the Issuer. The amount of any sinking fund payments not so
applied or allocated to the redemption of Securities of such series shall be added to the next cash
sinking fund payment for such series and, together with such payment, shall be applied in
accordance with the provisions of this Section. Any and all sinking fund moneys held on the stated
maturity date of the Securities of any particular series (or earlier, if such maturity is
accelerated), which are not held for the payment or redemption of particular Securities of such
series, shall be applied, together with other moneys, if necessary, sufficient for the purpose, to
the payment of the principal of, and interest on, the Securities of such series at maturity. The
Issuer’s obligation to make a mandatory or optional sinking fund payment shall automatically be
reduced by an amount equal to the sinking fund redemption price allocable to any Securities or
portions thereof called for redemption pursuant to the preceding paragraph on any sinking fund
payment date and converted into Common Stock; provided that, if the Trustee is not the conversion
agent for the Securities, the Issuer or such conversion agent shall give the Trustee written notice
prior to the date fixed for redemption of the principal amount of Securities or portions thereof so
converted.

     On or before each sinking fund payment date, the Issuer shall pay to the Trustee in cash or
shall otherwise provide for the payment of all interest accrued to the date fixed for redemption on
Securities to be redeemed on the next following sinking fund payment date.

     The Trustee shall not redeem or cause to be redeemed any Securities of a series with sinking
fund moneys or give any notice of redemption of Securities for such series by operation of the
sinking fund during the continuance of a default in payment of interest on such Securities or of
any Event of Default except that, where the mailing of notice of redemption of any Securities shall
theretofore have been made, the Trustee shall redeem or cause to be redeemed such Securities,
provided that it shall have received from the Issuer a sum sufficient for such redemption. Except
as aforesaid, any moneys in the sinking fund for such series at the time when any such default or
Event of Default shall occur, and any moneys thereafter paid into the sinking fund, shall, during
the continuance of such default or Event of Default, be deemed to have been collected under Article
5 and held for the payment of all such Securities. In case such Event of Default shall have been
waived as provided in Section 5.10, or the default cured on or before the 60th day preceding the
sinking fund payment date in any year, such moneys shall thereafter be applied on the next
succeeding sinking fund payment date in accordance with this Section to the redemption of such
Securities.

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     IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed as of
                    .

	 	 	 	 	 	 	 
	 	 	PS BUSINESS PARKS, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

Title:
	 	 
	 
	 	 	 	 	 	 
	 

	 	Attest:	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

Title:
	 	 
	 
	 	 	 	 	 	 
	 	 	                                        , Trustee	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

Title:
	 	 

48

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