As filed with the Securities and Exchange Commission on June 2, 1997
Registration No.333-27521
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Amendment No. 1
to
Form S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
D.R. HORTON, INC.
Co-Registrants are listed on the following page.
(Exact name of registrant as specified in its charter)
Delaware 75-2386963
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
Charles N. Warren
Senior Vice President
and General Counsel
1901 Ascension Blvd., Suite 100 1901 Ascension Blvd., Suite 100
Arlington, Texas 76006 Arlington, Texas 76006
(817) 856-8200 (817) 856-8200
(Address, including zip code, and (Name, address, including zip code, and
telephone number, including area code, telephone number, including area code,
of registrant's principal executive of agent for service)
offices)
The Commission is requested to mail copies of all orders,notices and
communications to:
Irwin F. Sentilles, III
Gibson, Dunn & Crutcher LLP
1717 Main Street, Suite 5400
Dallas, Texas 75201
(214) 698-3100
Approximate date of commencement of proposed sale to the public:
From time to time after this Registration Statement becomes effective.
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If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [_]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box.[X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering.[_]
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [_]
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CALCULATION OF REGISTRATION FEE
<TABLE>
===============================================================================
<CAPTION>
Title of each class of Proposed maximum aggregate Amount of
securities to be registered offering price (1) registration fee
- ------------------------------------------- -------------------------- ------------------
<S> <C> <C>
Debt Securities, Preferred Stock (par value
$.10 per share) and Common Stock (par
value $.01 per share)....................... $250,000,000 $75,758
Guarantees of the Debt Securities by direct
and indirect subsidiaries of D.R. Horton,
Inc. (2).................................... --- ---(3)
============================================ ========================== ==================
</TABLE>
(1) Exclusive of accrued interest and dividends, if any, and estimated solely
for the purpose of calculating the registration fee pursuant to Rule 457(o).
(2) See the following page for a list of the subsidiary guarantors.
(3) Pursuant to Rule 457(n) under the Securities Act of 1933, no separate fee
for the guarantees is payable.
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The Registrants hereby amend this registration statement on such date or
dates as may be necessary to delay its effective date until the Registrants
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until this registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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<PAGE>
The following direct and indirect subsidiaries of Registrant may
guarantee the Debt Securities and are Co-Registrants under this Registration
Statement.
<TABLE>
<CAPTION>
Jurisdiction of
Name of Incorporation I.R. S. Employer
Co-Registrant or Organization Identification No.
------------- --------------- ------------------
<S> <C> <C>
DRHI, Inc. Delaware 75-2433464
Meadows I, Ltd. Delaware 75-2436082
Meadows II, Ltd. Delaware 51-0342206
Meadows III, Ltd. Delaware 51-0342207
Meadows IX, Inc. New Jersey 75-2684821
Meadows X, Inc. New Jersey 75-2684823
D.R. Horton, Inc. - Minnesota Delaware 75-2527442
D.R. Horton, Inc. - Greensboro Delaware 75-2599897
D.R. Horton, Inc. - Birmingham Alabama 62-1666398
D.R. Horton, Inc. - New Jersey Delaware 75-2665362
D.R. Horton, Inc. - Torrey Delaware 75-2689997
DRH New Mexico Construction, Inc. Delaware 75-2640198
DRH Construction, Inc. Delaware 75-2633738
D.R. Horton, Inc. - Albuquerque Delaware 75-2636512
D.R. Horton, Inc. - Denver Delaware 75-2666727
D.R. Horton Denver Management Company, Inc. Colorado 75-2672969
D.R. Horton Denver No. 10, Inc. Colorado 75-2673541
D.R. Horton Denver No. 11, Inc. Colorado 75-2673542
D.R. Horton Denver No. 12, Inc. Colorado 75-2673543
D.R. Horton Denver No. 13, Inc. Colorado 75-2673544
D.R. Horton Denver No. 14, Inc. Colorado 75-2673545
D.R. Horton Denver No. 15, Inc. Colorado 75-2673548
D.R. Horton Denver No. 16, Inc. Colorado 75-2673559
D.R. Horton Denver No. 17, Inc. Colorado 75-2673560
D.R. Horton Denver No. 18, Inc. Colorado 75-2673561
D.R. Horton San Diego No. 9, Inc. California 75-2589292
D.R. Horton San Diego No. 10, Inc. California 75-2548255
D.R. Horton San Diego No. 11, Inc. California 75-2548258
D.R. Horton San Diego No. 12, Inc. California 75-2548261
D.R. Horton San Diego No. 13, Inc. California 75-2554799
D.R. Horton San Diego No. 14, Inc. California 75-2554800
D.R. Horton San Diego No. 15, Inc. California 75-2603930
D.R. Horton San Diego No. 16, Inc. California 75-2603931
D.R. Horton San Diego No. 17, Inc. California 75-2603933
D.R. Horton San Diego No. 18, Inc. California 75-2617777
D.R. Horton San Diego No. 19, Inc. California 75-2660254
D.R. Horton San Diego No. 20, Inc. California 75-2673562
D.R. Horton San Diego No. 21, Inc. California 75-2684017
D.R. Horton San Diego Holding Company, Inc. California 75-2589293
D.R. Horton Los Angeles No. 9, Inc. California 75-2589296
D.R. Horton Los Angeles No. 10, Inc. California 75-2603934
D.R. Horton Los Angeles No. 11, Inc. California 75-2603935
D.R. Horton Los Angeles No. 12, Inc. California 75-2614860
D.R. Horton Los Angeles No. 13, Inc. California 75-2627816
D.R. Horton Los Angeles No. 14, Inc. California 75-2627819
D.R. Horton Los Angeles No. 16, Inc. California 75-2684019
D.R. Horton Los Angeles No. 17, Inc. California 75-2697241
D.R. Horton Los Angeles Holding Company, Inc. California 75-2589298
D.R. Horton Los Angeles Management Company, Inc. California 75-2589287
D.R. Horton San Diego Management Company, Inc. California 75-2589285
S. G. Torrey Atlanta, Ltd. Georgia 58-1738756
SGS Communities at Grande Quay, LLC New Jersey 22-3481784
D.R. Horton Management Company, Ltd Texas 75-2436079
D.R. Horton - Texas, Ltd. Texas 75-2491320
D.R. Horton - Royalty, Ltd. Texas 75-2514117
</TABLE>
ii
<PAGE>
+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
Information contained herein is subject to completion or amendment. A
Registration Statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the Registration Statement becomes
effective. This Prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED JUNE 2, 1997
PROSPECTUS
$250,000,000
D.R. Horton, Inc.
Custom Homes
Debt Securities, Preferred Stock
and
Common Stock
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D.R. Horton, Inc., a Delaware corporation (the "Company"), may offer
and issue from time to time (i) its debt securities ("Debt Securities"),which
may be senior debt securities, senior subordinated debt securities or
subordinated debt securities, (ii) shares of its Preferred Stock, par value $.10
per share ("Preferred Stock"), or (iii) shares of its Common Stock, par value
$.01 per share ("Common Stock"). The Debt Securities, Preferred Stock and Common
Stock are herein collectively referred to as the "Securities". The Securities
may be offered in one or more separate classes or series, in amounts, at prices
and on terms to be determined by market conditions at the time of sale and to be
set forth in a supplement or supplements to this Prospectus (a "Prospectus
Supplement"). Any Securities may be offered with other Securities or separately.
Debt Securities or Preferred Stock may be exchangeable for or convertible into
shares of Common Stock. The aggregate offering price of the Securities will not
exceed $250,000,000.
Certain terms of any Debt Securities in respect of which this
Prospectus is being delivered will be set forth in an accompanying Prospectus
Supplement including, without limitation, the specific designation, aggregate
principal amount, purchase price, currency of payment, denomination, maturity,
interest rate (which may be fixed or variable) and time of payment of interest
(if any), guarantees thereof (if any), terms (if any) for the subordination,
redemption, purchase or conversion thereof, listing (if any) on a securities
exchange, additional or different covenants and events of default, and any other
material terms of the Debt Securities. Certain terms of any Preferred Stock in
respect of which this Prospectus is being delivered will be set forth in an
accompanying Prospectus Supplement including, without limitation, the specific
designation, number of shares, liquidation preference, purchase price,
dividends, voting, redemption and conversion provisions (if any), any listing on
a securities exchange and any other material terms of the Preferred Stock. The
purchase price of any Common Stock in respect of which this Prospectus is being
delivered will be set forth in an accompanying Prospectus Supplement. The
Prospectus Supplement will also contain information, where applicable, about
certain United States federal income tax considerations relating to the
Securities covered by the Prospectus Supplement.
The Company's Common Stock is listed on the New York Stock Exchange
under the symbol DHI.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------
The Securities may be sold on a negotiated or competitive bid basis to
or through underwriters or dealers designated from time to time or to other
purchasers directly or through agents designated from time to time. Certain
terms of any offering and sale of the Securities, including, where applicable,
the names of the underwriters, dealers or agents, if any, the principal amount
or number of shares to be purchased, the purchase price of the Securities, the
proceeds to the Company from such sale and any applicable commissions, discounts
and other items constituting compensation of such underwriters, dealers or
agents will also be set forth in an accompanying Prospectus Supplement.
This Prospectus may not be used to consumate sale of securities unless
accompanied by the applicable Prospectus Supplement.
THE DATE OF THIS PROSPECTUS IS _______, 1997
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in
accordance therewith, files reports and other information with the Securities
and Exchange Commission (the "Commission"). Reports, proxy and information
statements filed by the Company with the Commission pursuant to the
informational requirements of the Exchange Act may be inspected and copied at
the public reference facilities maintained by the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the following Regional Offices of
the Commission: New York Regional Office, Seven World Trade Center, 13th Floor,
New York, New York 10048; and Chicago Regional Office, Northwest Atrium Center,
500 West Madison Street, Room 3190, Chicago, Illinois 60661. Copies of such
material may be obtained from the Public Reference Section of the Commission at
450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. Such
material is also available for inspection at the offices of the New York Stock
Exchange, Inc., 20 Broad Street, New York, New York 10005. The Commission also
maintains a Web site (http://www.sec.gov) that contains reports, proxy and
information statements and other information regarding registrants such as the
Company which file electronically with the Commission.
The Company has filed with the Commission a Registration Statement
under the Securities Act of 1933, as amended (the "Securities Act"), with
respect to the Securities offered hereby. This Prospectus does not contain all
the information set forth in the Registration Statement and the exhibits and
schedules thereto, to which reference is hereby made. For further information
with respect to the Company and such Securities, reference is made to the
Registration Statement, including the documents and exhibits filed or
incorporated as a part thereof. Statements contained in this Prospectus
concerning the provisions of certain documents are not necessarily complete and,
in each instance, reference is made to the copy of such document filed as an
exhibit to the Registration Statement, each such statement being qualified in
all respects by such reference. Copies of all or any part of the Registration
Statement, including exhibits thereto, may be obtained, upon payment of the
prescribed fees, at the offices of the Commission as set forth above.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The Company's Annual Report on Form 10-K for the fiscal year ended
September 30, 1996, the Company's Quarterly Reports on Form 10-Q for the fiscal
quarters ended December 31, 1996 and March 31, 1997, the Company's Current
Report on Form 8-K dated March 13, 1997, and pages two through seven ("Election
of Directors" through "Executive Compensation-Compensation Committee Interlocks
and Insider Participation") and page eleven ("Executive
Compensation-Transactions with Management") contained in the Company's Proxy
Statement dated December 20, 1996, relating to the 1997 Annual Meeting of
Stockholders, are incorporated into this Prospectus by reference. All documents
filed by the Company pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act subsequent to the date of this Prospectus and prior to the
termination of any offering of the Securities shall be deemed to be incorporated
by reference into this Prospectus and to be a part hereof from the date of
filing such documents.
Any statement in a document incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any subsequently filed document
which is incorporated by reference herein modifies or supersedes such statement.
Any statement so modified or superseded shall not be deemed, except as modified
or superseded, to constitute a part of this Prospectus.
The Company will provide, without charge to each person, including any
beneficial owner, to whom a Prospectus is delivered, on the written or oral
request of any such person, a copy of any or all of the documents incorporated
herein by reference (not including exhibits to such documents unless such
exhibits are specifically incorporated by reference in the information contained
in this Prospectus). All such requests should be addressed to: D.R. Horton,
Inc., 1901 Ascension Blvd., Suite 100, Arlington, Texas 76006, Attention: Chief
Financial Officer (telephone (817) 856-8200).
CERTAIN PERSONS PARTICIPATING IN ANY OFFERING OF SECURITIES MAY ENGAGE
IN TRANSACTIONS THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF SUCH
SECURITIES. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING" IN THE
ACCOMPANYING PROSPECTUS SUPPLEMENT.
2
<PAGE>
THE COMPANY
The Company is a national homebuilder constructing and selling
single-family homes in metropolitan areas of the Mid-Atlantic, Midwest,
Southeast, Southwest and Western regions of the United States. The Company
offers high-quality homes with custom features, designed principally for the
entry level and move-up market segments. The Company's homes generally range in
size from 1,000 to 5,000 square feet and in price from $80,000 to $600,000, with
an average selling price of $166,600 for the year ended September 30, 1996, and
$167,800 for the six months ended March 31, 1997.
The Company is one of the most geographically diversified homebuilders
in the United States, with operating divisions in 21 states and 27 markets.
These markets are Albuquerque, Atlanta, Austin, Birmingham, Charlotte, Chicago,
Cincinnati, Dallas/Fort Worth, Denver, Greensboro, Greenville, Houston, Kansas
City, Las Vegas, Los Angeles, Minneapolis/St. Paul, Nashville, North Central New
Jersey, Orlando, Pensacola, Phoenix, Raleigh/Durham, Salt Lake City, San Diego,
South Florida, St. Louis and suburban Washington, D.C.
The Company was incorporated in Delaware on July 1, 1991, to acquire
all of the assets and businesses of 25 predecessor companies, which were
residential home construction and development companies owned or controlled by
Donald R. Horton. The Company's principal executive offices are located at 1901
Ascension Blvd., Suite 100, Arlington, Texas 76006, and its telephone number is
(817) 856-8200.
USE OF PROCEEDS
Except as otherwise set forth in the applicable Prospectus Supplement,
the Company intends to use the net proceeds from the sale of the Securities for
general corporate purposes, including, among other things, development of new
residential properties, acquisition of residential development properties and/or
other homebuilding companies and repayment of existing indebtedness.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the Company's historical ratio of
earnings to fixed charges for the five years ended September 30, 1996, and the
six months ended March 31, 1996 and 1997:
Six
Year ended months ended
December 31, Year ended September 30, March 31,
------------ -------------------------- ---------
1992 1993(1) 1994 1995 1996 1996 1997
---- ------- ---- ---- ---- ---- ----
Ratio (2)............. 7.41 6.64 4.46 3.43 3.68 2.83 3.03
==== ==== ==== ==== ==== ==== ====
(1) In 1993, the Company changed to a fiscal year ended September
30. The ratio for the twelve months ended September 30, 1993,
is presented for purposes of comparison.
(2) For purposes of computing the ratio of earnings to fixed
charges, earnings consist of the sum of income from continuing
operations before income taxes, interest amortized to cost of
sales, interest expense and the portion of rent expense deemed
to represent interest. Fixed charges consist of interest
incurred, whether expensed or capitalized, including
amortization of debt issuance costs, if applicable, and the
portion of rent expense deemed to represent interest. To date,
the Company has not issued any Preferred Stock; therefore, the
ratios of earnings to combined fixed charges and preferred
stock dividend requirements are the same as the ratios of
earnings to fixed charges presented above.
3
<PAGE>
DESCRIPTION OF DEBT SECURITIES
The following sets forth certain general terms and provisions of each
Indenture under which the Debt Securities are to be issued. The particular terms
of the Debt Securities will be set forth in a Prospectus Supplement relating to
such Debt Securities.
The Debt Securities are to be issued under one or more Indentures, as
amended or supplemented from time to time (the "Indenture"), to be entered into
between the Company, the Guarantors (as defined below), if any, and American
Stock Transfer & Trust Company, New York, New York, as trustee,(together with
any other trustee(s) chosen by the Company, qualified to act as such under the
Trust Indenture Act of 1939, as amended (the "TIA")and appointed in a
supplemental indenture with respect to a particular series, the "Trustee"). The
forms of Indentures have been filed as exhibits to the Registration Statement of
which this Prospectus is a part and will be available for inspection at the
corporate trust office of the Trustee, or as described above under "Available
Information". The Indentures are subject to, and governed by, the TIA. The
Company will execute an Indenture if and when the Company issues any Debt
Securities. The statements made hereunder relating to the Indentures and the
Debt Securities to be issued thereunder are summaries of certain provisions
thereof and do not purport to be complete and are subject to, and are qualified
in their entirety by reference to, all provisions of the Indentures (including
those terms made a part of the Indenture by reference to the TIA) and such Debt
Securities. Capitalized terms used but not defined herein shall have the
respective meanings set forth in the Indentures. References below to an
"Indenture" are deemed to constitute a reference to the applicable Indenture
under which a particular series of Debt Securities is issued.
General
The Debt Securities will be unsecured obligations of the Company. The
Debt Securities may be issued in one or more series. Specific terms of each
series of Debt Securities will be contained in authorizing resolutions or a
supplemental indenture relating to that series. There will be Prospectus
Supplements relating to particular series of Debt Securities. Each Prospectus
Supplement will describe, as to the Debt Securities to which it relates: (i) the
title of the Debt Securities; (ii) any limit upon the aggregate principal amount
of a series of Debt Securities which may be issued; (iii) the date or dates on
which principal of the Debt Securities will be payable and the amount of
principal which will be payable; (iv) the rate or rates (which may be fixed or
variable) at which the Debt Securities will bear interest, if any, as well as
the dates from which interest will accrue, the dates on which interest will be
payable and the record date for the interest payable on any payment date; (v)
the currency or currencies in which principal, premium, if any, and interest, if
any, will be paid; (vi) the place or places where principal, premium, if any,
and interest, if any, on the Debt Securities will be payable and where Debt
Securities which are in registered form can be presented for registration of
transfer or exchange and the identification of any depositary or depositaries
for any global debt securities; (vii) any provisions regarding the right of the
Company to redeem or purchase Debt Securities or of holders to require the
Company to redeem Debt Securities; (viii) the right, if any, of holders of the
Debt Securities to convert them into stock or other securities of the Company,
including any provisions intended to prevent dilution of the conversion rights
or otherwise; (ix) any provisions by which the Company will be required or
permitted to make payments to a sinking fund which will be used to redeem Debt
Securities or a purchase fund which will be used to purchase Debt Securities;
(x) the percentage of the principal amount at which Debt Securities will be
issued and, if other than the full principal amount thereof, the percentage of
the principal amount of the Debt Securities which is payable if maturity of the
Debt Securities is accelerated because of a default; (xi) the terms, if any,
upon which Debt Securities may be subordinated to other indebtedness of the
Company; (xii) any additions to, modifications of or deletions from the terms of
the Debt Securities with respect to Events of Default or covenants or other
provisions set forth in the Indenture; and (xiii) any other material terms of
the Debt Securities, which may be different than the terms set forth in this
Prospectus.
Each Prospectus Supplement will describe, as to the Debt Securities to
which it relates, any guarantees (the "Guarantees") by certain direct and
indirect subsidiaries of the Company which may guarantee the Debt Securities
(the "Guarantors"), including the terms of subordination (if any) of any such
Guarantee.
4
<PAGE>
Events of Default and Remedies
An Event of Default with respect to any series of Debt Securities is
defined in the Indenture as being default in payment of the principal of or
premium, if any, on any of the Debt Securities of such series; default for 30
days in payment of any installment of interest on any Debt Security of such
series; default by the Company or any Guarantor for 60 days after notice in the
observance or performance of any other covenants in the Indenture relating to
such series; and certain events involving bankruptcy, insolvency or
reorganization of the Company or certain Guarantors. The Indenture provides that
the Trustee may withhold notice to the holders of any series of Debt Securities
of any default (except a default in payment of principal, premium, if any, or
interest, if any, with respect to such series of Debt Securities) if the Trustee
considers it in the interest of the holders of such series of Debt Securities to
do so.
The Indenture provides that if any Event of Default has occurred and is
continuing with respect to any series of Debt Securities, the Trustee or the
holders of not less than 25% in principal amount of such series of Debt
Securities then outstanding may declare the principal of all the Debt Securities
of such series to be due and payable immediately. However, the holders of a
majority in principal amount of the Debt Securities of such series then
outstanding by written notice to the Trustee and the Company may waive any Event
of Default (other than any Event of Default in payment of principal or interest)
with respect to such series of Debt Securities. Holders of a majority in
principal amount of the then outstanding Debt Securities of any series may
rescind an acceleration with respect to such series and its consequences (except
an acceleration due to nonpayment of principal or interest on such series) if
the rescission would not conflict with any judgement or decree and if all
existing Events of Default with respect to such series have been cured or
waived.
The holders of a majority in principal amount of the Debt Securities of
any series then outstanding will have the right to direct the time, method and
place of conducting any proceedings for any remedy available to the Trustee with
respect to such series, subject to certain limitations specified in the
Indenture.
Defeasance of Indenture
The Indenture permits the Company and the Guarantors to terminate all
of their respective obligations under the Indenture as they relate to any
particular series of Debt Securities, other than the obligation to pay interest,
if any, on and the principal of the Debt Securities of such series and certain
other obligations, at any time by (i) depositing in trust with the Trustee,
under an irrevocable trust agreement, money or U.S. government obligations in an
amount sufficient to pay principal of and interest, if any, on the Debt
Securities of such series to their maturity, and (ii) complying with certain
other conditions, including delivery to the Trustee of an opinion of counsel or
a ruling received from the Internal Revenue Service to the effect that holders
will not recognize income, gain or loss for federal income tax purposes as a
result of the Company's exercise of such right 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 otherwise.
In addition, the Indenture permits the Company and the Guarantors to
terminate all of their respective obligations under the Indenture as they relate
to any particular series of Debt Securities (including the obligations to pay
interest, if any, on and the principal of the Debt Securities of such series and
certain other obligations), at any time by (i) depositing in trust with the
Trustee, under an irrevocable trust agreement, money or U.S. government
obligations in an amount sufficient to pay principal of and interest, if any, on
the Debt Securities of such series to their maturity, and (ii) complying with
certain other conditions, including delivery to the Trustee of an opinion of
counsel or a ruling received from the Internal Revenue Service to the effect
that holders will not recognize income, gain or loss for federal income tax
purposes as a result of the Company's exercise of such right 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 otherwise, which opinion of counsel is based
upon a change in the applicable federal tax law since the date of the Indenture.
Transfer and Exchange
A holder will be able to transfer or exchange Debt Securities only in
accordance with the provisions of the Indenture. The registrar may require a
holder, among other things, to furnish appropriate endorsements and transfer
documents, and to pay any taxes and fees required by law or permitted by the
Indenture.
5
<PAGE>
Amendment, Supplement and Waiver
Subject to certain exceptions, the Indenture, the Debt Securities or
the Guarantees of a particular series may be amended or supplemented with the
consent (which may include consents obtained in connection with a tender offer
or exchange offer for Debt Securities) of the holders of at least a majority in
principal amount of the Debt Securities of such series then outstanding, and any
existing Default under, or compliance with any provision of the Indenture
relating to a particular series of Debt Securities may be waived (other than any
continuing Default or Event of Default in the payment of interest on or the
principal of such Debt Securities) with the consent (which may include consents
obtained in connection with a tender offer or exchange offer for Debt
Securities) of the holders of a majority in principal amount of the Debt
Securities of such series then outstanding. Without the consent of any holder,
the Company and the Trustee may amend or supplement the Indenture, the Debt
Securities or the Guarantees to cure any ambiguity, defect or inconsistency; to
provide for uncertificated Debt Securities in addition to or in place of
certificated Debt Securities; to make any change that does not adversely affect
the legal rights of any holder; to create a series and establish its terms; or
to delete a Guarantor which, in accordance with the terms of the Indenture,
ceases to be liable on its Guarantee.
Without the consent of each holder affected, the Company and the
Trustee may not (i) reduce the amount of Debt Securities of such series whose
holders must consent to an amendment, supplement or waiver, (ii) reduce the rate
of or change the time for payment of interest, (iii) reduce the principal of or
change the fixed maturity of any Debt Security or alter the provisions with
respect to redemptions or mandatory offers to repurchase Debt Securities
pursuant to certain covenants set forth in the Indenture, (iv) make any Debt
Security payable in money other than that stated in the Debt Security, (v)
modify the ranking or priority of the Debt Securities or any Guarantee, (vi)
release any Guarantor from any of its obligations under its Guarantee or the
Indenture otherwise than in accordance with the Indenture, or (vii) waive a
continuing default in the payment of principal of or interest on the Debt
Securities.
The right of any holder to participate in any consent required or
sought pursuant to any provision of the Indenture (and the obligation of the
Company to obtain any such consent otherwise required from such holder) may be
subject to the requirement that such holder shall have been the holder of record
of any Debt Securities with respect to which such consent is required or sought
as of a date identified by the Trustee in a notice furnished to holders in
accordance with the terms of the Indenture.
Concerning the Trustee
In the ordinary course of its business, American Stock Transfer and
Trust Company, the Trustee, provides, and may continue to provide, service to
the Company as transfer agent for the Common Stock of the Company. The Indenture
contains certain limitations on the rights of the Trustee, should it become a
creditor of the Company, to obtain payment of claims in certain cases or to
realize on certain property received in respect of any such claim as security or
otherwise. The Trustee will be permitted to engage in other transactions;
however, if it acquires any conflicting interest, it must eliminate such
conflict or resign.
The Indenture provides that in case an Event of Default occurs and is
not cured, the Trustee will be required, in the exercise of its power, to use
the degree of care of a prudent person in similar circumstances in the conduct
of its own affairs. The Trustee may refuse to perform any duty or exercise any
right or power under the Indenture, unless it receives indemnity satisfactory to
it against any loss, liability or expense.
Governing Law
The Indenture, the Debt Securities and the Guarantees will be governed
by the laws of the State of New York without giving effect to principles of
conflict of laws.
DESCRIPTION OF CAPITAL STOCK
The Company's authorized capital stock is 100,000,000 shares of Common
Stock, $.01 par value, and 30,000,000 shares of Preferred Stock, $.10 par value.
At May 12, 1997, 37,222,841 shares of Common Stock and no shares of Preferred
Stock were outstanding.
6
<PAGE>
Preferred Stock
The Preferred Stock may be issued in series with any rights and
preferences which may be authorized by the Company's Board of Directors. There
will be Prospectus Supplements relating to particular series of Preferred Stock.
Each Prospectus Supplement will describe, as to the Preferred Stock to which it
relates: (i) the title of the Preferred Stock; (ii) any limit upon the number of
shares of the series of Preferred Stock which may be issued; (iii) the
preference, if any, to which holders of the series of Preferred Stock will be
entitled upon liquidation of the Company; (iv) the date or dates on which the
Company will be required or permitted to redeem the Preferred Stock; (v) the
terms, if any, on which the Company or holders of the Preferred Stock will have
the option to cause the Preferred Stock to be redeemed or purchased; (vi) the
voting rights, if any, of the holders of the Preferred Stock; (vii) the
dividends, if any, which will be payable with regard to the series of Preferred
Stock (which may be fixed dividends or participating dividends and may be
cumulative or non-cumulative); (viii) the right, if any, of holders of the
Preferred Stock to convert it into another class of stock or securities of the
Company, including provisions intended to prevent dilution of those conversion
rights; (ix) any provisions by which the Company will be required or permitted
to make payments to a sinking fund which will be used to redeem Preferred Stock
or a purchase fund which will be used to purchase Preferred Stock; and (x) any
other material terms of the Preferred Stock.
Common Stock
Holders of shares of Common Stock are entitled to one vote for each
share held of record on all matters submitted to a vote of stockholders. There
are no cumulative voting rights with respect to the election of directors.
Accordingly, the holder or holders of a majority of the outstanding shares of
Common Stock will be able to elect the entire Board of Directors of the Company.
Holders of Common Stock have no preemptive rights and are entitled to such
dividends as may be declared by the Board of Directors of the Company out of
funds legally available therefor. The Common Stock is not entitled to any
sinking fund, redemption or conversion provisions. On liquidation, dissolution
or winding up of the Company, the holders of Common Stock are entitled to share
ratably in the net assets of the Company remaining after the payment of all
creditors and liquidation preferences of Preferred Stock, if any. The
outstanding shares of Common Stock are duly authorized, validly issued, fully
paid and nonassessable. There will be a Prospectus Supplement relating to any
offering of Common Stock offered by this Prospectus. The transfer agent and
registrar for the Common Stock is American Stock Transfer & Trust Company, New
York, New York, which also serves as Trustee under the Indenture.
The Company currently has the following provisions in its charter or
bylaws which could be considered to be "anti-takeover" provisions: (i) an
article in its charter prohibiting stockholder action by written consent; (ii)
an article in its charter requiring the affirmative vote of the holders of
two-thirds of the outstanding shares of Common Stock to remove a director; (iii)
a bylaw limiting the persons who may call special meetings of stockholders to
the Board of Directors or a committee thereof so empowered by the Board, the
bylaws or by law; and (iv) a bylaw providing time limitations for nominations
for election to the Board of Directors or for proposing matters which can be
acted upon at stockholders' meetings. These provisions may have the effect of
delaying stockholder actions with respect to certain business combinations and
the election of new members to the Board of Directors. As such, the provisions
could have the effect of discouraging open market purchases of the Company's
Common Stock because they may be considered disadvantageous by a stockholder who
desires to participate in a business combination or elect a new director.
Additionally, the issuance of Preferred Stock under certain circumstances could
have the effect of delaying or preventing a change of control or other corporate
action.
The Company is a Delaware corporation and is subject to Section 203 of
the Delaware General Corporation Law. In general, Section 203 prevents an
"interested stockholder" (defined generally as a person owning 15% or more of
the Company's outstanding voting stock) from engaging in a "business
combination" with the Company for three years following the date that person
became an interested stockholder unless: (i) before that person became an
interested stockholder, the Board of Directors of the Company approved the
transaction in which the interested stockholder became an interested stockholder
or approved the business combination; (ii) upon completion of the transaction
that resulted in the interested stockholder becoming an interested stockholder,
the interested stockholder owned at least 85% of the voting stock of the Company
outstanding at the time the transaction commenced (excluding stock held by
persons who are both directors and officers of the Company or by certain
employee stock plans); or (iii) on or following the date on
7
<PAGE>
which that person became an interested stockholder, the business combination is
approved by the Company's Board and authorized at a meeting of stockholders by
the affirmative vote of the holders of at least 66 2/3% of the outstanding
voting stock of the Company (excluding shares held by the interested
stockholder). A "business combination" includes mergers, asset sales and other
transactions resulting in a financial benefit to the interested stockholder.
PLAN OF DISTRIBUTION
The Securities may be sold (i) through agents, (ii) through
underwriters, (iii) through dealers, (iv) directly to purchasers (through a
specific bidding or auction process or otherwise); or (v) through a combination
of any such methods of sale. The distribution of Securities may be effected from
time to time in one or more transactions at a fixed price or prices, which may
be changed, or at market prices prevailing at the time of sale, at prices
relating to such prevailing market prices or at negotiated prices.
Offers to purchase the Securities may be solicited by agents designated
by the Company from time to time. Any such agent involved in the offer or sale
of the Securities will be named, and any commissions payable by the Company to
such agent will be set forth, in the Prospectus Supplement. Unless otherwise
indicated in the Prospectus Supplement, any such agent will be acting on a best
efforts basis for the period of its appointment. Any such agent may be deemed to
be an underwriter, as that term is defined in the Securities Act, of the
Securities so offered and sold.
If an underwriter or underwriters are utilized in the sale of
Securities, the Company will execute an underwriting agreement with such
underwriter or underwriters at the time an agreement for such sale is reached,
and the names of the specific managing underwriter or underwriters, as well as
any other underwriters, and the terms of the transactions, including
compensation of the underwriters and dealers, if any, will be set forth in the
Prospectus Supplement, which will be used by the underwriters to make resales of
the Securities.
If a dealer is utilized in the sale of the Securities, the Company or
an underwriter will sell such Securities to the dealer, as principal. The dealer
may then resell such Securities to the public at varying prices to be determined
by such dealer at the time of resale. The name of the dealer and the terms of
the transactions will be set forth in the Prospectus Supplement relating
thereto.
Offers to purchase the Securities may be solicited directly by the
Company and sales thereof may be made by the Company directly to institutional
investors or others. The terms of any such sales, including the terms of any
bidding or auction process, if utilized, will be described in the Prospectus
Supplement relating thereto.
Agents, underwriters and dealers may be entitled under agreements which
may be entered into with the Company to indemnification by the Company against
certain liabilities, including liabilities under the Securities Act, and any
such agents, underwriters or dealers, or their affiliates may be customers of,
engage in transactions with or perform services for the Company in the ordinary
course of business.
LEGAL MATTERS
Gibson, Dunn & Crutcher LLP, Dallas, Texas has rendered an opinion
(filed as an exhibit to the Registration Statement) with respect to the validity
of the Securities being offered hereby. If certain legal matters in connection
with offerings made by this Prospectus are passed on by counsel for the
underwriters of an offering of those Securities, that counsel will be named in
the Prospectus Supplement relating to that offering.
EXPERTS
The consolidated financial statements of the Company appearing in the
Company's Annual Report (Form 10-K) for the year ended September 30, 1996, and
also appearing elsewhere herein, have been audited by Ernst & Young LLP,
independent auditors, as set forth in their reports thereon included therein and
included and incorporated by reference herein. Such consolidated financial
statements are included and incorporated herein by reference in reliance upon
such reports given upon the authority of such firm as experts in accounting and
auditing.
8
<PAGE>
The combined financial statements of S. G. Torrey Atlanta, Ltd. and
Affiliates appearing in the Company's Current Report (Form 8-K) dated March 13,
1997, have been audited by Whittington, McLemore, Land, Davis & White, P.C.,
independent auditors, as set forth in their report thereon included therein and
incorporated herein by reference. Such consolidated financial statements are
incorporated herein by reference in reliance upon such report given upon the
authority of such firm as experts in accounting and auditing.
9
<PAGE>
<PAGE>
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
<S> <C>
Report of Independent Auditors ................................................................................F-2
Consolidated Balance Sheets, September 30, 1995, and 1996 and March 31, 1997...................................F-3
Consolidated Statements of Income for the three years ended
September 30, 1996 and the Six Months Ended March 31, 1996 and 1997 . . . . . ..............................F-4
Consolidated Statements of Stockholders' Equity
for the three years ended September 30, 1996 and the Six Months Ended March 31, 1997........................F-5
Consolidated Statements of Cash Flows for the three years
ended September 30, 1996 and the Six Months Ended March 31, 1996 and 1997...................................F-6
Notes to Consolidated Financial Statements.....................................................................F-7
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Board of Directors
D.R. Horton, Inc.
We have audited the accompanying consolidated balance sheets of D.R.
Horton, Inc. and subsidiaries as of September 30, 1996 and 1995, and the related
consolidated statements of income, stockholders' equity and cash flows for each
of the three years in the period ended September 30, 1996. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position of D.R.
Horton, Inc. and subsidiaries at September 30, 1996 and 1995, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended September 30, 1996, in conformity with generally
accepted accounting principles.
/s/ Ernst & Young LLP
Fort Worth, Texas
November 8, 1996, except for Note I, as to which the date is May 16, 1997
F-2
<PAGE>
<TABLE>
<CAPTION>
D.R. HORTON, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
September 30, March 31,
-------------------------------- -----------------
1995 1996 1997
-------------- -------------- -----------------
(In thousands) (Unaudited)
<S> <C> <C> <C>
ASSETS
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 16,737 $ 32,467 $ 26,814
Inventories:
Finished homes and construction in progress . . . . . . . . . . . . . . 182,772 216,264 348,148
Residential lots - developed and under development .. . . . . . . . . . 98,824 127,707 191,984
Land held for development . . . . . . . . . . . . . . . . . . . . . . . 1,312 1,312 1,312
-------- --------- ---------
282,908 345,283 541,444
Property and equipment (net). . . . . . . . . . . . . . . . . . . . . . . 5,359 5,631 11,852
Earnest money deposits and other assets . . . . . . . . . . . . . . . . . 10,680 15,247 26,196
Excess of cost over net assets acquired (net) . . . . . . . . . . . . . . 3,103 4,285 28,303
-------- -------- ---------
$ 318,787 $ 402,913 $634,609
======= ======= =======
LIABILITIES
Accounts payable.. . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 29,312 $ 34,391 $ 52,931
Accrued expenses and customer deposits. . . . . . . . . . . . . . . . . . 13,523 21,011 26,164
Notes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 169,879 169,873 318,550
------- ------- -------
212,714 225,275 397,645
STOCKHOLDERS' EQUITY
Preferred stock, $.10 par value, 30,000,000
shares authorized, no shares issued . . . . . . . . . . . . . . . . . . -- -- --
Common stock, $.01 par value, 100,000,000 shares
authorized, 25,437,067 shares in 1995, 32,362,036 in 1996
and 36,839,791 in 1997, issued and outstanding. . . . . . . . . . . . . 254 324 368
Additional capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91,635 159,714 206,147
Retained earnings .. . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,184 17,600 30,449
------ -------- -------
106,073 177,638 236,964
------- ------- -------
$ 318,787 $ 402,913 $ 634,609
======= ======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
F-3
<PAGE>
D.R. HORTON, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Year Ended September 30, Six Months Ended
March 31,
------------------------------------------------ ------------------------------
1994 1995 1996 1996 1997
-------------- -------------- -------------- ------------ --------------
(In thousands, except net income per share) (Unaudited)
<S> <C> <C> <C> <C> <C>
Revenues. . . . . . . . . . . . . . . . . . . . $ 393,317 $ 437,388 $ 547,336 $ 235,110 $ 303,977
Cost of sales . . . . . . . . . . . . . . . . . 326,099 359,742 449,054 193,402 247,828
------- -------- ---------- --------- ----------
67,218 77,646 98,282 41,708 56,149
Selling, general and administrative expense . . 39,073 44,549 53,860 24,573 33,911
-------- -------- ---------- --------- ----------
Operating income. . . . . . . . . . . . . . . . 28,145 33,097 44,422 17,135 22,238
Other:
Interest expense. . . . . . . . . . . . . . . -- (1,161) (1,474) (941) (1,600)
Other income. . . . . . . . . . . . . . . . . 446 621 1,484 597 1,122
------- --------- ---------- --------- ----------
446 (540) 10 (344) (478)
-------- --------- ---------- --------- ----------
INCOME BEFORE INCOME TAXES . . . . . . . . 28,591 32,557 44,432 16,791 21,760
Provision for income taxes. . . . . . . . . . . 10,928 12,018 17,053 6,254 8,263
-------- -------- ---------- ------ ----------
NET INCOME . . . . . . . . . . . . . . . . $ 17,663 $ 20,539 $ 27,379 $ 10,537 $ 13,497
======== ========= ========== ======== ==========
Net income per share. . . . . . . . . . . . . . $ 0.63 $ 0.74 $ 0.87 $ 0.35 $ 0.40
========= ========= ========== ======== ==========
Weighted average number of shares of
common stock outstanding, including
common stock equivalents. . . . . . . . . . . 27,845 27,849 31,420 29,874 33,635
======= ======== ======= ======== =======
</TABLE>
See accompanying notes to consolidated financial statements.
F-4
<PAGE>
D.R. HORTON, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Total
Common Additional Retained Stockholders'
Stock Capital Earnings Equity
----- ------- -------- ------
(In thousands, except number of shares)
<S> <C> <C> <C> <C>
Balances at October 1, 1993 . . . . . . . . . . . . . . . . . . $ 155 $ 61,305 $ 4,413 $ 65,873
Net income . . . . . . . . . . . . . . . . . . . . . . . . . -- -- 17,663 17,663
Exercise of stock options (109,860 shares) . . . . . . . . . 1 907 -- 908
Issuance under D.R. Horton, Inc.
employee benefit plans (7,200 shares) . . . . . . . . . . . -- 110 -- 110
Six percent stock dividend . . . . . . . . . . . . . . . . . 9 11,225 (11,235) (1)
----- -------- ------ -----------
Balances at September 30, 1994 . . . . . . . . . . . . . . . . 165 73,547 10,841 84,553
Net income . . . . . . . . . . . . . . . . . . . . . . . . . -- -- 20,539 20,539
Exercise of stock options (116,400 shares) . . . . . . . . . 1 772 -- 773
Issuances under D.R. Horton, Inc.
employee benefit plans (20,549 shares). . . . . . . . . . . -- 208 -- 208
Nine percent stock dividend. . . . . . . . . . . . . . . . . 15 17,181 (17,196) --
Seven for five stock split . . . . . . . . . . . . . . . . . 73 (73) -- --
---- ---------- ----------- ------------
Balances at September 30, 1995 . . . . . . . . . . . . . . . . 254 91,635 14,184 106,073
Net income . . . . . . . . . . . . . . . . . . . . . . . . . -- -- 27,379 27,379
Stock sold through public offering
(4,375,000 shares) . . . . . . . . . . . . . . . . . . . . 44 43,149 -- 43,193
Exercise of stock options (124,619 shares) . . . . . . . . . 1 696 -- 697
Issuances under D.R. Horton, Inc.
employee benefit plans (29,300 shares) . . . . . . . . . . 1 296 -- 297
Eight percent stock dividend . . . . . . . . . . . . . . . . 24 23,938 (23,963) (1)
---- -------- ------ -----------
Balances at September 30, 1996 . . . . . . . . . . . . . . . . 324 159,714 17,600 177,638
Net income (unaudited ) . . . . . . . . . . . . . . . . . . -- -- 13,497 13,497
Stock sold through public offering (3,500,000
shares) (unaudited). . . . . . . . . . . . . . . . . . . . 35 36,368 -- 36,403
Issuance as partial consideration for acquisition
(844,444 shares) (unaudited). . . . . . . . . . . . . . . . 8 9,142 -- 9,150
Stock issuance under employee benefit plans
(15,100 shares) (unaudited). . . . . . . . . . . . . . . . -- 134 -- 134
Exercise of stock options (118,211
shares)(unaudited) . . . . . . . . . . . . . . . . . . . . 1 789 -- 790
Cash dividends paid (unaudited) . . . . . . . . . . . . . . -- -- (648) (648)
----- ------- ------- -------
Balances at March 31, 1997 (unaudited). . . . . . . . . . . . . $ 368 $ 206,147 $ 30,449 $ 236,964
==== ======= ====== ========
</TABLE>
See accompanying notes to consolidated financial statements.
F-5
<PAGE>
D.R. HORTON, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Six Months
Year Ended September 30, Ended March 31,
------------------------------------------- -------------------
1994 1995 1996 1996 1997
---- ---- ----- ---- ----
(In thousands) (Unaudited)
OPERATING ACTIVITIES
<S> <C> <C> <C> <C> <C>
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 17,663 $ 20,539 $ 27,379 $ 10,537 $ 13,497
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization. . . . . . . . . . . . . . . . . . 1,190 2,025 2,583 1,408 1,651
Expense associated with issuance of stock under
certain D.R. Horton employee benefit plans . . . . . . . . . 110 208 229 90 100
Changes in operating assets and liabilities:
Increase in inventories. . . . . . . . . . . . . . . . . . . . . (61,234) (56,401) (62,375) (36,428) (110,078)
Increase in earnest money deposits and other assets. . . . . . . (393) (910) (4,271) ( 164) (7,534)
Increase (decrease) in accounts payable, accrued
expenses and customer deposits . . . . . . . . . . . . . . . . (1,317) 2,197 12,567 942 13,951
-------- ---------- -------- -------- --------
NET CASH USED IN OPERATING ACTIVITIES (43,981) (32,342) (23,888) (23,615) (88,413)
-------- ---------- -------- -------- --------
INVESTING ACTIVITIES
Net purchase of property and equipment . . . . . . . . . . . . . . (2,563) (2,414) (2,667) (1,819) (3,778)
Net cash paid for acquisitions . . . . . . . . . . . . . . . . . . (3,583) (4,577) (1,370) (580) (44,560)
------- ----- -------- --------- ---------
NET CASH USED IN INVESTING ACTIVITIES (6,146) (6,991) (4,037) (2,399) (48,338)
------- -------- -------- -------- ---------
FINANCING ACTIVITIES
Proceeds from notes payable . . . . . . . . . . . . . . . . . . . 133,297 232,964 238,987 51,093 160,157
Repayment of notes payable. . . . . . . . . . . . . . . . . . . . (92,791) (188,857) (239,289) (63,721) (65,605)
Proceeds from common stock offerings, including
stock associated with certain employee benefit plans. . . . . . -- -- 43,260 43,260 36,403
Cash dividends paid . . . . . . . . . . . . . . . . . . . . . . . -- -- -- -- (648)
Proceeds from exercise of stock options . . . . . . . . . . . . . 907 773 697 543 791
-------- ---------- ---------- -------- ---------
NET CASH PROVIDED BY FINANCING
ACTIVITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41,413 44,880 43,655 31,175 131,098
------ -------- -------- -------- -------
INCREASE (DECREASE) IN CASH . . . . . . . . . . . . (8,714) 5,547 15,730 5,161 (5,653)
Cash at beginning of period. . . . . . . . . . . . . . . . . . . . 19,904 11,190 16,737 16,737 32,467
-------- -------- -------- -------- -------
Cash at end of period. . . . . . . . . . . . . . . . . . . . . . . $ 11,190 $ 16,737 $ 32,467 $ 21,898 $ 26,814
====== ======== ======== ======= =======
Supplemental cash flow information:
Interest paid . . . . . . . . . . . . . . . . . . . . . . . . . $ 7,059 $ 11,689 $ 14,628 $ 7,429 $ 8,130
===== ======== ======= ======== =======
Income taxes paid . . . . . . . . . . . . . . . . . . . . . . . $ 11,561 $ 11,336 $ 16,143 $ 7,270 $ 10,920
====== ======== ======= ======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
F-6
<PAGE>
D.R. HORTON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Information pertaining to March 31, 1996 and 1997
and the periods then ended is unaudited
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business. The Company is engaged primarily in the construction and sale
of single-family housing in 21 states in the United States. The Company designs,
builds and sells single-family houses on finished lots which it purchases ready
for home construction or which it develops. The Company purchases undeveloped
land to develop into finished lots for future construction of single-family
houses and for sale to others. The Company also provides title agency and
mortgage services in selected markets; however, such activities are not material
to the consolidated operating results of the Company.
Principles of Consolidation: The consolidated financial statements
include the accounts of D.R. Horton, Inc. (the Company) and its subsidiaries.
Intercompany accounts and transactions have been eliminated in consolidation.
Accounting Principles: The preparation of financial statements in
accordance with generally accepted accounting principles requires management to
make estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from those
estimates.
Statements of Financial Accounting Standards: During the fourth quarter
of 1996, the Company elected to adopt Statement of Financial Accounting
Standards No. 121 "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed of" ("FAS 121") retroactive to October 1, 1995.
The adoption of FAS 121 did not impact the Company's results of operations or
financial position and did not result in a restatement of any of the financial
results for fiscal 1996. The Company believes the adoption of FAS 121 would not
have had an effect on financial results in fiscal 1995 and 1994 had FAS 121 been
adopted in those years.
Statement of Financial Accounting Standards No. 123 "Accounting for
Stock-Based Compensation" ("FAS 123"), issued in October 1995, establishes
financial accounting and reporting standards for stock-based employee
compensation plans. As permitted by FAS 123, the Company has elected to continue
to use Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued
to Employees" (APB 25) and related Interpretations, in accounting for its Stock
Incentive Plan. Refer to Note F.
Cash: The Company considers all highly liquid investments with an
initial maturity of three months or less when purchased to be cash equivalents.
Amounts in transit from title companies for home closings are included in cash.
Cost of Sales: Cost of sales includes home warranty costs, purchased
discounts for customer financing, and sales commissions paid to third parties.
Fair Value of Financial Instruments: The fair value of financial
instruments is determined by reference to various market data and other
valuation techniques as appropriate. The carrying amounts of cash and cash
equivalents and trade payables approximate fair value because of the short
maturity of these financial instruments. Generally, the homebuilding notes
payable bear interest at rates indexed to LIBOR or the Federal Funds rate.
Therefore, the carrying amounts of the outstanding borrowings at September
30,1996, approximate fair value. At both September 30, 1996 and 1995, the
estimated fair value of the Company's debt, including the interest rate swap
agreement described in Note B, approximated its carrying value.
F-7
<PAGE>
D.R. HORTON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Information pertaining to March 31, 1996 and 1997
and the periods then ended is unaudited
Fair value estimates are made at specific points in time based on
relevant market information and information about the financial instrument.
These estimates are subjective in nature and involve matters of significant
judgment, and therefore, cannot be determined with precision. Changes in
assumptions could significantly affect estimates.
Inventories: Inventories are stated at the lower of cost (specific
identification method) or net realizable value. In addition to direct land
acquisition, land development and direct housing construction costs, inventory
costs include interest and real estate taxes, which are capitalized in inventory
during the development and construction periods. Residential lots are
transferred to construction in progress when building permits are requested.
Land and development costs, capitalized interest and real estate taxes incurred
during land development are allocated to individual lots on a prorata basis.
Interest. The Company capitalizes interest during development and
construction. Capitalized interest is charged to cost of sales as the related
inventory is delivered to the home buyer. The summary of interest for 1994, 1995
and 1996 is:
Year Ended September 30,
------------------------------------
1994 1995 1996
----------- ----------- ---------
(In thousands)
Capitalized interest, beginning of period $ 1,581 $ 4,325 $ 7,118
Interest incurred 7,269 12,002 14,835
Interest expensed
Directly -- (1,161) (1,474)
Amortized to cost of sales (4,525) (8,048) (9,437)
----- ------ ------
Capitalized interest, end of period $ 4,325 $ 7,118 $ 11,042
===== ===== ======
Property and Equipment: Property and equipment, including model home
furniture, are stated on the basis of cost. Major renewals and improvements are
capitalized. Repairs and maintenance are expensed as incurred. Depreciation
generally is provided using the straight-line method over the estimated useful
life of the asset. Accumulated depreciation was $3,481,000 and $5,000,000 as of
September 30, 1995 and 1996, respectively.
Excess of Cost Over Net Assets Acquired: The excess of amounts paid for
business acquisitions over the net fair value of the assets acquired and
liabilities assumed is amortized using the straight-line method over twenty
years. Additional consideration paid in subsequent periods under the terms of
purchase agreements are included as acquisition costs. Amortization expense was
$42,000, $114,000 and $188,000,
F-8
<PAGE>
D.R. HORTON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Information pertaining to March 31, 1996 and 1997
and the periods then ended is unaudited
in 1994, 1995 and 1996, respectively. Accumulated amortization was $156,000 and
$344,000 at September 30, 1995 and 1996, respectively.
Revenue Recognition: Revenue generally is recognized at the time of the
closing of a sale, when title to and possession of the property transfer to the
buyer.
Net Income Per Share: Net income per share is based upon the average
number of shares of common stock outstanding during each year and the effect of
common stock equivalents related to dilutive stock options.
NOTE B - NOTES PAYABLE
Notes payable (in thousands):
<TABLE>
<CAPTION>
September 30,
----------------------------
1995 1996
------------ ------------
<S> <C> <C>
Unsecured: Banks
$250,000 term and revolving credit facility,
maturing April, 1999 to April, 2001, rates range
from Federal Funds + 1.6% to LIBOR + 2% $ 134,800 $ 158,600
$10,000 revolving line of credit, maturing March 1997,
LIBOR + 2% --- ---
$20,000 revolving line of credit maturing September 1997,
LIBOR + 1 1/2% 7,000 ---
$17,500 revolving line of credit, payable on demand with
six months' notice, LIBOR + 1 1/4% 13,770 4,000
Other notes payable 14,309 7,273
------ -----
Total notes payable $ 169,879 $ 169,873
======= =======
</TABLE>
Maturities of notes payable, assuming the revolving lines of credit are
not extended, are $10.3 million in 1997, $0.4 million in 1998, $59.2 million in
1999, and $100.0 million in 2001. The weighted average interest rates at
September 30, 1995 and 1996 were 7.9% and 7.5%, respectively.
In addition to the stated interest rates, various credit facilities
require the Company to pay certain fees. The $250 million credit facility also
provides $10 million for use as letters of credit. Effective October 1, 1996,
there was a reduction in the interest rate on the revolving portion of $250
million credit facility. Certain of the notes and loan agreements contain
financial covenants generally relating to cash dividends, minimum interest
coverage, net worth, leverage, inventory levels and other matters.
F-9
<PAGE>
D.R. HORTON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Information pertaining to March 31, 1996 and 1997
and the periods then ended is unaudited
The Company uses an interest rate swap agreement to help manage a
portion of its interest rate exposure. The agreement converts from a variable
rate to a fixed rate on a notional amount of $100 million. The agreement expires
April 2001. The Company does not expect non-performance by the counterparty, and
any losses incurred in the event of non-performance would not be material. As a
result of this agreement, the Company incurred net interest expense of $0.4
million during 1996. Net payments or receipts under the Company's interest rate
swap agreement are recorded as adjustments to interest expense.
NOTE C - ACQUISITIONS
In 1994 and 1995, the Company made the following acquisitions:
Company Acquired Date Acquired Consideration
---------------- ------------- -------------
Regency Development, Inc. (Birmingham) September 1995 $ 12.3 million
Arappco, Inc. (Greensboro) July 1995 $ 12.2 million
Joseph M. Miller Construction, Inc./
Argus Development, Inc. (Minneapolis) April 1994 $ 16.6 million
Consideration includes cash paid, promissory notes and assumption of certain
accounts payable and notes payable which were repaid subsequent to the
acquisitions.
During the first six months of the 1997 fiscal year, three acquisitions were
made (unaudited):
In October, 1996, the Company completed the acquisition of the principal
assets (approximately $7.7 million, primarily inventories) of Trimark
Communities, L.L.C., of Denver, Colorado, for $6.8 million in cash and
the assumption of approximately $1.0 million in trade accounts and notes
payable associated with the acquired assets.
In December, 1996, the Company purchased the principal assets
(approximately $19.5 million, primarily inventories) of SGS Communities,
Inc., of New Jersey (SGS), for $10.6 million in cash and the assumption
of $10.1 million in trade accounts and notes payable associated with the
acquired assets.
In February, 1997, the Company completed the acquisition of all of the
outstanding capital stock of the entities comprising the Torrey Group of
Atlanta, Georgia (Torrey) for $28.5 million in cash, 844,444 newly
issued shares of the Company's common stock, valued at $9.2 million, and
a contingent payment estimated at $1 million. In addition, $8.4 million
was paid to partnerships affiliated with the Torrey Group for real
estate assets of such partnerships. The estimated market value of all
assets acquired, less liabilities assumed, amounts to $24.4 million.
F-10
<PAGE>
D.R. HORTON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Information pertaining to March 31, 1996 and 1997
and the periods then ended is unaudited
The final determination of the valuations of SGS and Torrey have not
been completed. Any subsequent adjustments to the beginning balance sheet
valuation amounts estimated herein will be recorded in future periods as
adjustments to the excess of cost over net assets acquired and amortized over 20
years.
With the exception of Torrey, the above acquisitions contain provisions
for additional consideration to be paid annually for up to four years subsequent
to the acquisition date, based upon income before income taxes. Such additional
consideration will be recorded when paid as excess cost over net assets
acquired, which is amortized using the straight line method over 20 years.
All of the acquired companies are involved in homebuilding and land
development. The Company has accounted for these acquisitions under the purchase
method and has included the operations of the acquired businesses in its
Consolidated Statements of Income since their acquisition.
Presented below are the Company's unaudited pro forma summary
consolidated results of operations, as if the Arappco and Regency Development
acquisitions had occurred on October 1, 1994 and the Torrey acquisition had
occurred on October 1, 1996. In preparing the pro forma information, various
assumptions were made and this information does not purport to be indicative of
what would have occurred had the acquisitions been made as of the dates for
which pro formas were prepared.
September 30, 1995 March 31, 1997
--------------------------- -----------------------
(In thousands, except net income per share)
Revenues $ 474,476 $ 383,821
Net income $ 22,359 $ 13,666
Net income per share $ 0.80 $ 0.40
NOTE D - STOCKHOLDERS' EQUITY
The Board of Directors of the Company declared the following common
stock dividends:
Declared Date Amount Paid Record Date
------------- ------ ---- -----------
5/12/94 6 % 6/30/94 5/31/94
4/20/95 9 % 6/30/95 5/31/95
4/22/96 8 % 5/24/96 5/08/96
F-11
<PAGE>
D.R. HORTON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Information pertaining to March 31, 1996 and 1997
and the periods then ended is unaudited
Stock Split: On August 15, 1995, the Board of Directors declared a
seven-for-five stock split effected in the form of a 40% stock dividend on its
common stock. Accordingly, the $.01 par value for the additional shares issued,
in respect of the seven-for-five stock split, was transferred from additional
paid-in-capital to common stock.
Net income per share and weighted average shares outstanding for all
periods presented have been restated to reflect the stock dividends and the
stock split. Other than as required to maintain the financial ratios and net
worth requirements under the credit agreements, there are no restrictions on the
payment of cash dividends by the Company.
NOTE E - PROVISION FOR INCOME TAXES
Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes. These
differences primarily relate to the capitalization of inventory costs, the
accrual of warranty costs, and depreciation. The Company's deferred tax assets
and liabilities are not significant.
The difference between income tax expense and tax computed by applying
the federal statutory income tax rate to income before taxes is due primarily to
the effect of applicable state income taxes.
Income tax expense consists of:
Year ended September 30,
1994 1995 1996
-------------- ------------ ------------
(In thousands)
Current:
Federal $ 10,477 $ 11,767 $ 17,650
State 963 1,274 1,829
--- ------- -------
11,440 13,041 19,479
------ ------ ------
Deferred:
Federal (468) (923) (2,198)
State (44) (100) (228)
--- ------- ------
(512) (1,023) (2,426)
---- ------ ------
$ 10,928 $ 12,018 $ 17,053
====== ====== ======
NOTE F - EMPLOYEE BENEFIT PLANS
The D.R. Horton, Inc. Profit Sharing Plus plan is a 401(k) plan for
Company employees. The Company matches 50% of employees' voluntary contributions
up to a maximum of 3% of each participant's earnings. Additional employer
contributions in the form of profit sharing are at the discretion of the
Company. Expenses for this Plan were $158,000, $233,000 and $327,000 for 1994,
1995 and 1996, respectively.
F-12
<PAGE>
D.R. HORTON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Information pertaining to March 31, 1996 and 1997
and the periods then ended is unaudited
Effective January 1, 1994, the Company adopted the D.R. Horton, Inc.
Stock Tenure Plan (an Employee Stock Ownership Plan), covering those employees
generally not participating in certain other D.R. Horton benefit plans.
Contributions are made at the discretion of the Company. Expenses of $110,000,
$106,000 and $229,000 were recognized for 1994, 1995 and 1996, respectively,
related to Company contributions of common stock to the Plan.
The Company's Supplemental Executive Retirement Plans (SERP's) are
non-qualified deferred compensation programs that provide benefits payable to
certain management employees upon retirement, death, or termination of
employment with the Company. SERP No. 1 provides for voluntary deferral of
compensation which is invested under a trust agreement. All salary deferrals
under this Plan have been accrued and the investments are recorded as an other
asset. Under SERP No. 2, the Company accrues an unfunded benefit, as well as an
interest factor based upon a predetermined formula. The Company recorded
$231,000, $347,000 and $313,000 of expense for SERP No. 2 in 1994, 1995 and
1996, respectively.
In 1996, the Company approved the D.R. Horton, Inc. Employee Stock
Purchase Plan which allows employees to purchase stock directly from the Company
at market value.
At September 30, 1996, 237,500 shares of common stock have been reserved
for future issuance under the stock tenure and stock purchase plans.
The D.R. Horton, Inc. 1991 Stock Incentive Plan provides for the
granting of stock options to certain key employees of the Company to purchase
shares of common stock. Options are granted at exercise prices which approximate
the market value of the Company's common stock at the date of the grant. Options
generally expire 10 years after the dates on which they were granted and vest
evenly over the life of the option. At September 30, 1996, 3,034,250 shares of
common stock have been authorized for future issuance under this plan. Activity
under the plan is:
<TABLE>
<CAPTION>
1994 1995 1996
------------------------ ------------------------- -----------------------
Weighted Weighted Weighted
Average Average Average
Exercise Exercise Exercise
STOCK OPTIONS Options Prices Options Prices Options Prices
---------- ----------- ------------ ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at beginning of year. . 872,655 $ 7.32 992,713 $ 8.60 1,782,517 $ 6.56
Granted . . . . . . . . . . . . . .185,700 13.98 313,000 12.15 559,000 10.15
Exercised . . . . . . . . . . . . (109,860) 3.62 (116,400) 3.84 (124,619) 3.24
Cancelled . . . . . . . . . . . . . (6,500) 7.86 (19,940) 9.80 (122,022) 8.54
Effects of stock dividends . . . . . 50,718 8.26 613,144 6.87 145,908 6.69
------ ------ ---------- ------ ---------- -------
Outstanding at end of year . . . . .992,713 $ 8.60 1,782,517 $ 6.56 2,240,784 $ 7.11
======= ====== ========= ====== ========= =======
Exercisable at end of year . . . . 403,997 $ 5.55 565,551 $ 4.44 659,615 $ 4.74
======= ====== ========== ====== ========== =======
</TABLE>
Exercise prices for options outstanding at September 30, 1996, ranged
from $1.804 to $10.185. The weighted average remaining contractual lives of
those options are as follows:
F-13
<PAGE>
D.R. HORTON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Information pertaining to March 31, 1996 and 1997
and the periods then ended is unaudited
<TABLE>
<CAPTION>
Outstanding Exercisable
-------------------------------------- ------------------------------------
Weighted Weighted
Average Average Average Average
Exercise Exercise Maturity Exercise Maturity
Price Range Options Price (Years) Options Price (Years)
------------ ---------- --------- ----------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Less than $4 161,631 $ 1.89 5.0 161,631 $ 1.89 5.0
$4 - $8 1,239,792 5.99 6.9 459,841 5.35 6.4
More than $8 839,361 9.76 9.1 38,143 9.47 7.9
---------- ---- --- ------ ---- ---
Total 2,240,784 $ 7.11 7.6 659,615 $ 4.74 6.2
========= ==== === ======= ===== ===
</TABLE>
The Company has elected to follow Accounting Principles Board Opinion
No. 25, in accounting for its employee stock options. The exercise price of the
Company's employee stock options equals the market price of the underlying stock
on the date of grant and therefore, no compensation expense is recognized.
Application of the fair value method, as specified by FAS 123, had no
material impact on net income or net income per share amounts. However, such pro
forma effects are not indicative of future fair value effects until the rules
stipulated by FAS 123 are applied to all outstanding, nonvested awards.
NOTE G - COMMITMENTS AND CONTINGENCIES
The Company is involved in lawsuits and other contingencies in the
ordinary course of business. Management believes that, while the ultimate
outcome of the contingencies cannot be predicted with certainty, the ultimate
liability, if any, will not have a material adverse effect on the Company's
financial position.
In the ordinary course of business, the Company enters into option
agreements to purchase land and developed lots. Deposits of approximately $5.0
million at September 30, 1996, secure the Company's performance under these
agreements.
The Company leases office space under noncancelable operating leases.
Minimum annual lease payments under these leases at September 30, 1996, are
approximately:
(In thousands)
1997 . . . . . . . . . . . . . . . . . . . . . $ 342
1998 . . . . . . . . . . . . . . . . . . . . . 199
1999 . . . . . . . . . . . . . . . . . . . . . 46
2000 . . . . . . . . . . . . . . . . . . . . . 38
2001 . . . . . . . . . . . . . . . . . . . . . 33
-----
$ 658
=====
Rent expense approximated $840,000, $989,000 and $1,140,000 for 1994,
1995 and 1996, respectively.
F-14
<PAGE>
D.R. HORTON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Information pertaining to March 31, 1996 and 1997
and the periods then ended is unaudited
In the normal course of its business activities, the Company provides
letters of credit and performance bonds, issued by third parties, to secure
performance under various contracts. At September 30, 1996, outstanding letters
of credit totalled $5.2 million and performance bonds totalled $21.7 million.
NOTE H - QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
Quarterly results of operations are:
<TABLE>
<CAPTION>
1996
------------------------------
Three Months Ended
-------------------------------------------------------------------
September 30 June 30 March 31 December 31
---------------- ----------- ------------ --------------
(In thousands, except per share amounts)
<S> <C> <C> <C> <C>
Revenues. . . . . . . . . . . . . . .$ 168,943 $ 143,283 $ 114,042 $ 121,068
Gross Margin. . . . . . . . . . . . . 30,677 25,897 20,175 21,533
Net Income. . . . . . . . . . . . . . 9,408 7,434 5,122 5,415
Net income per share(1) . . . . . . . .29 .23 .16 .19
1995
------------------------------
Three Months Ended
--------------------------------------------------------------------
September 30 June 30 March 31 December 31
---------------- ------------ ------------ -------------
(In thousands, except per share amounts)
Revenues. . . . . . . . . . . . . . $ 132,827 $ 120,529 $ 87,076 $ 96,956
Gross Margin. . . . . . . . . . . . 23,992 21,647 15,359 16,648
Net Income. . . . . . . . . . . . . 6,681 6,090 3,948 3,820
Net income per share(1) . . . . . . .24 .22 .14 .14
1994
-----------------------------
Three Months Ended
--------------------------------------------------------------------
September 30 June 30 March 31 December 31
----------------- ----------- ----------- -----------------
(In thousands, except per share amounts)
Revenues. . . . . . . . . . . . . . $ 124,024 $ 107,782 $ 82,606 $ 78,905
Gross Margin. . . . . . . . . . . . 21,038 17,729 14,416 14,035
Net Income. . . . . . . . . . . . . 5,679 4,690 3,698 3,596
Net income per share(1) . . . . . . .20 .17 .13 .13
</TABLE>
(1) Net income per share differs from that previously reported due to the effect
of the 1996 eight percent stock dividend.
F-15
<PAGE>
D.R. HORTON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Information pertaining to March 31, 1996 and 1997
and the periods then ended is unaudited
NOTE I - SUMMARIZED FINANCIAL INFORMATION
The securities that may be issued under a debt offering contemplated by
the Company will include full and unconditional guarantees by certain
subsidiaries of the Company. Summarized financial information of the Company and
its subsidiaries is presented below. It is not contemplated that all
subsidiaries will serve as guarantors. Management has determined that separate
financial statements and other disclosures concerning the subsidiaries are not
material to investors.
As of and for the periods ended: (In thousands)
March 31, 1997- (unaudited)
<TABLE>
<CAPTION>
D.R. Horton, Guarantor Nonguarantor Intercompany
Inc. Subsidiaries Subsidiaries Eliminations Total
-------------- ---------------- ------------------ ------------------ --------------
<S> <C> <C> <C> <C> <C>
Inventory . . . . . . . . . . . . . $ 217,728 $323,716 $ -- $ -- $ 541,444
Total assets. . . . . . . . . . . . 550,920 384,537 1,669 (302,517) 634,609
Notes payable . . . . . . . . . . . 311,703 6,847 -- -- 318,550
Total liabilities . . . . . . . . . 343,400 355,018 659 (301,432) 397,645
Revenues. . . . . . . . . . . . . . 109,011 194,966 681 (681) 303,977
Gross profit. . . . . . . . . . . . 21,138 35,011 550 (550) 56,149
Net income. . . . . . . . . . . . . 11,042 24,157 216 (21,918) 13,497
March 31, 1996-(unaudited)
D.R. Horton, Guarantor Nonguarantor Intercompany
Inc. Subsidiaries Subsidiaries Eliminations Total
-------------- ---------------- ------------------ ------------------ ---------------
Inventory. . . . . . . . . . . . . $ 173,721 $145,615 $ -- $ -- $ 319,336
Total assets . . . . . . . . . . . 318,158 162,359 621 (119,053) 362,085
Notes payable. . . . . . . . . . . 149,404 8,137 -- -- 157,541
Total liabilities. . . . . . . . . 173,566 145,794 112 (117,979) 201,493
Revenues. . . . . . . . . . . . . . 119,354 115,756 538 (538) 235,110
Gross profit. . . . . . . . . . . . 20,995 20,713 397 (397) 41,708
Net income. . . . . . . . . . . . . 12,366 20,781 197 (22,807) 10,537
</TABLE>
F-16
<PAGE>
D.R. HORTON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Information pertaining to March 31, 1996 and 1997
and the periods then ended is unaudited
September 30, 1996
<TABLE>
<CAPTION>
D.R. Horton, Guarantor Nonguarantor Intercompany
Inc. Subsidiaries Subsidiaries Eliminations Total
---------------- ---------------- ----------------- ----------------- ---------------
<S> <C> <C> <C> <C> <C>
Inventory . . . . . . . . . . . . $ 180,061 $165,222 $ -- $ -- $345,283
Total assets. . . . . . . . . . . 353,563 181,586 1,117 (133,353) 402,913
Notes payable . . . . . . . . . . 167,907 1,966 -- -- 169,873
Total liabilities . . . . . . . . 197,255 160,019 279 (132,278) 225,275
Revenues. . . . . . . . . . . . . 269,853 277,483 1,210 (1,210) 547,336
Gross profit. . . . . . . . . . . 47,346 50,936 901 (901) 98,282
Net income . . . . . . . . . . . 30,771 54,368 553 (58,313) 27,379
September 30, 1995
D.R. Horton, Guarantor Nonguarantor Intercompany
Inc. Subsidiaries Subsidiaries Eliminations Total
---------------- ---------------- ----------------- ----------------- ---------------
Inventory. . . . . . . . . . . . $ 150,692 $ 132,216 $ -- $ -- $282,908
Total assets. . . . . . . . . . . 277,131 151,761 380 (110,485) 318,787
Notes payable . . . . . . . . . . 157,544 12,335 -- -- 169,879
Total liabilities. . . . . . . . 185,028 137,013 29 (109,356) 212,714
Revenues. . . . . . . . . . . . . 259,165 178,223 576 (576) 437,388
Gross profit. . . . . . . . . . . 44,274 33,372 444 (444) 77,646
Net income . . . . . . . . . . . 18,281 35,336 205 (33,283) 20,539
</TABLE>
September 30, 1994
<TABLE>
<CAPTION>
D.R. Horton, Guarantor Intercompany
Inc. Subsidiaries Eliminations Total
------------------ ------------------ ------------------- ----------------
<S> <C> <C> <C> <C>
Inventory. . . . . . . . . . . . $ 170,834 $33,260 $ -- $ 204,094
Total assets. . . . . . . . . . . 236,573 47,329 (53,004) 230,898
Notes payable . . . . . . . . . . 106,224 2,354 -- 108,578
Total liabilities. . . . . . . . 140,152 58,356 (52,163) 146,345
Revenues. . . . . . . . . . . . . 355,577 37,740 -- 393,317
Gross profit. . . . . . . . . . . 60,305 6,913 -- 67,218
Net income . . . . . . . . . . . 38,728 18,708 (39,773) 17,663
</TABLE>
F-17
<PAGE>
NO DEALER, SALESPERSON OR OTHER PERSON IS AUTHORIZED TO GIVE ANY INFORMATION
OR TO MAKE ANY REPRESENTATION OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND,
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR
A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES
OFFERED HEREBY, NOR DOES IT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN
OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY TO ANY PERSON IN ANY
CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCE, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED
HEREIN IS CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF.
TABLE OF CONTENTS
Page
Available Information 2
Incorporation of Certain Information
by Reference 2
The Company 3
Use of Proceeds 3
Ratio of Earnings to Fixed Charges 3
Description of Debt Securities 4
Description of Capital Stock 6
Plan of Distribution 8
Legal Matters 8
Experts 8
Financial Statements F-1
$250,000,000
D.R. HORTON, INC.
CUSTOM HOMES
DEBT SECURITIES,
PREFERRED STOCK AND
COMMON STOCK
--------------
PROSPECTUS
, 1997
--------------
<PAGE>
===============================================================================
===============================================================================
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.*
Securities and Exchange Commission registration fee.......... $75,758
Blue Sky fees and expenses................................... 15,000
Printing and engraving fees and expenses..................... 50,000
Trustees' fees and expenses.................................. 5,000
Rating agency fees .......................................... 125,000
Accountants' fees and expenses............................... 30,000
Legal fees and expenses...................................... 50,000
Miscellaneous................................................ 200,000
----------
Total .................................. $550,758
-----------
-----------
* All fees and expenses will be paid by the Company. All fees and
expenses other than the Securities and Exchange Commission filing fees
are estimated.
Item 15. Indemnification of Directors and Officers.
The Company's Amended and Restated Certificate of Incorporation, as
amended, provides that the Company shall, to the full extent permitted by the
General Corporation Law of the State of Delaware (the "DGCL") or other
applicable laws presently or hereafter in effect, indemnify each person who is
or was or had agreed to become a director or officer of the Company, or each
such person who is or was serving or who had agreed to serve at the written
request of the Board of Directors or an officer of the Company as an employee or
agent of the Company or as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, in any such
case owned or controlled by the Company, including the heirs, executors,
administrators or estate of such person, and eliminates the personal liability
of its directors to the full extent permitted by the DGCL or other applicable
laws presently or hereafter in effect. The Company has entered into an
indemnification agreement with each of its directors and executive officers.
Section 145 of the DGCL permits a corporation to indemnify its
directors and officers against expenses (including attorney's fees), judgments,
fines and amounts paid in settlement actually and reasonably incurred by them in
connection with any action, suit or proceeding brought by third parties, if such
directors or officers acted in good faith and in a manner they reasonably
believed to be in or not opposed to the best interests of the corporation and,
with respect to any criminal action or proceeding, had no reasonable cause to
believe their conduct was unlawful. In a derivative action, i.e., one by or in
the right of the corporation, indemnification may be made only for expenses
actually and reasonably incurred by directors and officers in connection with
the defense or settlement of an action or suit, and only with respect to a
matter as to which they shall have acted in good faith and in a manner they
reasonably believed to be in or not opposed to the best interests of the
corporation, except that no indemnification shall be made if such person shall
have been adjudged liable for negligence or misconduct in the performance of his
respective duties to the corporation, although the court in which the action or
suit was brought may determine upon application that the defendant officers or
directors are fairly and reasonably entitled to indemnity for such expenses
despite such adjudication of liability.
Section 102(b)(7) of the DGCL provides that a corporation may eliminate
or limit the personal liability of a director to the corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director,
provided that such provisions shall not eliminate or limit the liability of a
director (i) for any breach of the director's duty of loyalty to the corporation
or its stockholders, (ii) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the DGCL, or (iv) for any transaction from which the director
derived an improper personal benefit. No such provision shall eliminate or limit
the liability of a director for any act or omission occurring prior to the date
when such provision becomes effective.
II-1
<PAGE>
The Underwriting Agreement, which is Exhibit 1.1 hereto, provides that
the Underwriters named therein will indemnify and hold harmless the Company and
each director, officer or controlling person of the Company from and against
certain liabilities, including liabilities under the Securities Act.
The Company also has obtained Directors and Officers Liability
Insurance that provides insurance coverage for certain liabilities which may be
incurred by the Company's directors and officers in their capacity as such.
Item 16. Exhibits and Financial Schedules.
(a) Exhibits:
Exhibit
Number Exhibits
------ --------
*1.1 - Form of Underwriting Agreement
**4.1(a) - Form of Senior Debt Securities Indenture (including
form of notes)
4.1(b) - Form of Senior Subordinated Debt Securities Indenture
(including form of notes)
4.1(c) - Form of Subordinated Debt Securities Indenture (including
form of notes)
4.2 - Amended and Restated Certificate of Incorporation,
as amended, of the Company (incorporated by reference
from Exhibit 3.1 to the Company's Annual Report on Form
10-K for the fiscal year ended September 30, 1995)
4.3 - Amended and Restated Bylaws of the Company (incorporated
by reference from Exhibit 3.1 to the Company's Quarterly
Report on Form 10-Q for the fiscal quarter ended
March 31, 1997)
5.1 - Opinion of Gibson, Dunn & Crutcher LLP, Dallas, Texas, as
to the validity of the Securities being registered
**12.1 - Statement of computation of ratios of earnings to fixed
charges
23.1 - Consent of Gibson, Dunn & Crutcher LLP, Dallas, Texas
(See Exhibit 5.1)
23.2 - Consent of Ernst & Young LLP, Fort Worth, Texas
23.3 - Consent of Whittington, McLemore, Land, Davis & White,
P.C., Rome, Georgia
**24.1 - Powers of Attorney (See signature page of this
Registration Statement)
25.1 - Statement of eligibility of trustee on Form T-1
- -----------
* To be filed by amendment pursuant to a Current Report on Form 8-K to be
incorporated herein by reference.
** Previously filed.
II-2
<PAGE>
Item 17. Undertakings.
(a) The Company hereby undertakes that, for purposes of determining any
liability under the Securities Act of 1933, each filing of the Company's annual
report pursuant to Section 13 (a) or Section 15 (d) of the Securities Exchange
Act of 1934 (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15 (d) of the Securities Act of 1934) that is
incorporated by reference in the Registration Statement shall be deemed to be a
new Registration Statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(b) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Company pursuant to the foregoing provisions described in Item
15, or otherwise, the Company has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Company of expenses incurred or paid by a director, officer or controlling
person of the Company in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Company will, unless in the
opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
(c) The Company undertakes:
(1) To file, during any period in which offers or
sales are being made, a post-effective amendment to this
Registration Statement:
(i) To include any prospectus required by
Section 10(a)(3) of the Securities Act of
1933;
(ii) To reflect in the Prospectus any facts or
events arising after the effective date of
the Registration Statement (or the most
recent post-effective amendment thereof)
which, individually or in the aggregate,
represent a fundamental change in the
information set forth in the Registration
Statement; and
(iii) To include any material information with
respect to the plan of distribution not
previously disclosed in the Registration
Statement or any material change to such
information in the Registration Statement;
Provided, however, that paragraphs (1)(i) and (1)(ii) do not
apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in
periodic reports filed by the Company pursuant to Section 13
or Section 15(d) of the Securities Exchange Act of 1934 that
are incorporated by reference in the Registration Statement.
(2) That, for the purposes of determining any
liability under the Securities Act of 1933, each such
post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered
therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a
post-effective amendment any of the securities being
registered which remain unsold at the termination of the
offering.
(d) The Company hereby undertakes to file an application for the
purpose of determining the eligibility of the Trustee to act under subsection
(a) of Section 310 of the Trust Indenture Act in accordance with the rules and
regulations prescribed by the Commission under Section 305(b)(2) of the Act.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant, D.R. Horton, Inc., and the Co-Registrants named below, certify that
they have reasonable grounds to believe that they meet all the requirements for
filing on Form S-3 and have duly caused this Amendment No. 1 to be signed
on their behalf by the undersigned, thereunto duly authorized, in the City of
Arlington, State of Texas, on June 2, 1997.
D.R. HORTON, INC.
By /s/ Donald R. Horton
--------------------
Donald R. Horton
Chairman of the Board and President
CO-REGISTRANTS:
DRHI, Inc.
Meadows I, Ltd.
Meadows II, Ltd.
Meadows III, Ltd.
Meadows IX, Ltd.
Meadows X, Ltd.
D.R. Horton, Inc. - Minnesota
D.R. Horton, Inc. - Greensboro
D.R. Horton, Inc. - Birmingham
D.R. Horton, Inc. - New Jersey
D.R. Horton, Inc. - Torrey
DRH New Mexico Construction, Inc.
DRH Construction, Inc.
D.R. Horton, Inc. - Albuquerque
D.R. Horton, Inc. - Denver
D.R. Horton Denver Management Company, Inc.
D.R. Horton Denver No. 10, Inc.
D.R. Horton Denver No. 11, Inc.
D.R. Horton Denver No. 12, Inc.
D.R. Horton Denver No. 13, Inc.
D.R. Horton Denver No. 14, Inc.
D.R. Horton Denver No. 15, Inc.
D.R. Horton Denver No. 16, Inc.
D.R. Horton Denver No. 17, Inc.
D.R. Horton Denver No. 18, Inc.
D.R. Horton San Diego No. 9, Inc.
D.R. Horton San Diego No. 10, Inc.
D.R. Horton San Diego No. 11, Inc.
D.R. Horton San Diego No. 12, Inc.
D.R. Horton San Diego No. 13, Inc.
D.R. Horton San Diego No. 14, Inc.
D.R. Horton San Diego No. 15, Inc.
D.R. Horton San Diego No. 16, Inc.
D.R. Horton San Diego No. 17, Inc.
D.R. Horton San Diego No. 18, Inc.
D.R. Horton San Diego No. 19, Inc.
D.R. Horton San Diego No. 20, Inc.
D.R. Horton San Diego No. 21, Inc.
D.R. Horton San Diego Holding Company, Inc.
D.R. Horton Los Angeles No. 9, Inc.
D.R. Horton Los Angeles No. 10, Inc.
D.R. Horton Los Angeles No. 11, Inc.
D.R. Horton Los Angeles No. 12, Inc.
D.R. Horton Los Angeles No. 13, Inc.
D.R. Horton Los Angeles No. 14, Inc.
II-4
<PAGE>
D.R. Horton Los Angeles No. 16, Inc.
D.R. Horton Los Angeles No. 17, Inc.
D.R. Horton Los Angeles Holding Company, Inc.
D.R. Horton Los Angeles Management Company, Inc.
D.R. Horton San Diego Management Company, Inc.
S. G. Torrey Atlanta, Ltd.
By: /s/ David J. Keller
-------------------
David J. Keller
Treasurer of the Co-Registrants listed above
SGS COMMUNITIES AT GRANDE QUAY, LLC
By Meadows IX, Inc., a member
By /s/ Donald R. Horton
--------------------
Donald R. Horton
Chairman of the Board
and
By Meadows X, Inc., a member
By /s/ Donald R. Horton
--------------------
Donald R. Horton
Chairman of the Board
D.R. HORTON MANAGEMENT COMPANY, LTD.
By Meadows I, Ltd., its general partner
By /s/ Donald R. Horton
--------------------
Donald R. Horton
Chairman of the Board
D.R. HORTON - TEXAS, LTD.
By Meadows I, Ltd., its general partner
By /s/ Donald R. Horton
--------------------
Donald R. Horton
Chairman of the Board and President
D.R. HORTON - ROYALTY, LTD.
By Meadows I, Ltd., its general partner
By /s/ Donald R. Horton
--------------------
Donald R. Horton
Chairman of the Board and President
II-5
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, this
Amendment No. 1 to the Registration Statement has been signed by the following
persons in the capacities and on the dates indicated.
REGISTRANT OFFICERS AND DIRECTORS
Signature Title Date
--------- ----- ----
/s/ Donald R. Horton Chairman of the Board and President June 2, 1997
----------------------
Donald R. Horton Principal Executive Officer)
/s/ Richard Beckwitt Director
--------------------
Richard Beckwitt June 2, 1997
Richard I. Galland* Director
----------------------
Richard I. Galland June 2, 1997
Richard L. Horton* Director
---------------------
Richard L. Horton June 2, 1997
Terrill J. Horton* Director
---------------------
Terrill J. Horton June 2, 1997
/s/ David J. Keller Treasurer, Chief Financial Officer
-------------------
and Director (Principal Accounting
David J. Keller and Financial Officer) June 2, 1997
Francine I. Neff* Director
--------------------
Francine I. Neff June 2, 1997
Scott J. Stone * Director
------------------
Scott J. Stone June 2, 1997
Donald J. Tomnitz* Director
---------------------
Donald J. Tomnitz June 2, 1997
*By: /s/Donald R. Horton
-------------------
Donald R. Horton
Attorney-in-Fact
II-6
<PAGE>
CO-REGISTRANT OFFICERS AND DIRECTORS
D.R. Horton, Inc. - Albuquerque
DRH New Mexico Construction, Inc.
D.R. Horton, Inc. - Torrey
DRH Construction, Inc.
D.R. Horton, Inc. - Minnesota
D.R. Horton, Inc. - Birmingham
D.R. Horton Los Angeles No. 9, Inc.
D.R. Horton Los Angeles No. 10, Inc.
D.R. Horton Los Angeles No. 11, Inc.
D.R. Horton Los Angeles No. 12, Inc.
D.R. Horton Los Angeles No. 13, Inc.
D.R. Horton Los Angeles No. 14, Inc.
D.R. Horton Los Angeles No. 16, Inc.
D.R. Horton Los Angeles No. 17, Inc.
D.R. Horton Los Angeles Management
Company, Inc.
D.R. Horton Los Angeles Holding Company, Inc.
D.R. Horton San Diego Holding Company, Inc.
D.R. Horton San Diego Management Company, Inc.
D.R. Horton San Diego No. 9, Inc.
D.R. Horton San Diego No. 10, Inc.
D.R. Horton San Diego No. 11, Inc.
D.R. Horton San Diego No. 12, Inc.
D.R. Horton San Diego No. 13, Inc.
D.R. Horton San Diego No. 14, Inc.
D.R. Horton San Diego No. 15, Inc.
D.R. Horton San Diego No. 16, Inc.
D.R. Horton San Diego No. 17, Inc.
D.R. Horton San Diego No. 18, Inc.
D.R. Horton San Diego No. 19, Inc.
D.R. Horton San Diego No. 20, Inc.
D.R. Horton San Diego No. 21, Inc.
S.G. Torrey Atlanta, Ltd.
Signature Title Date
--------- ----- ----
/s/ Donald R. Horton Chairman of the Board
(Principal Executive Officer) June 2, 1997
----------------------
Donald R. Horton
/s/ David J. Keller Treasurer (Principal Accounting
and Financial Officer) June 2, 1997
---------------------
David J. Keller
II-7
<PAGE>
D.R. Horton Denver Management Company, Inc.
D.R. Horton, Inc. - Denver
D.R. Horton Denver No. 10, Inc.
D.R. Horton Denver No. 11, Inc.
D.R. Horton Denver No. 12, Inc.
D.R. Horton Denver No. 13, Inc.
D.R. Horton Denver No. 14, Inc.
D.R. Horton Denver No. 15, Inc.
D.R. Horton Denver No. 16, Inc.
D.R. Horton Denver No. 17, Inc.
D.R. Horton Denver No. 18, Inc.
Signature Title Date
- --------- ----- ----
/s/ Donald R. Horton Director, Chief Executive Officer
(Principal Executive Officer) June 2, 1997
----------------------
Donald R. Horton
/s/ Richard Beckwitt Director, President June 2, 1997
----------------------
Richard Beckwitt
/s/ David J. Keller Vice President, Treasurer (Principal
Accounting and Financial Officer) June 2, 1997
- -----------------------
David J. Keller
DRHI, Inc.
Meadows I, Ltd.
Signature Title Date
--------- ----- ----
/s/ Donald R. Horton Chairman of the Board
(Principal Executive Officer) June 2, 1997
----------------------
Donald R. Horton
/s/ David J. Keller Director, Vice President, Treasurer
(Principal Accounting and Financial Officer) June 2, 1997
-------------------
David J. Keller
II-8
<PAGE>
Meadows IX, Inc.
Meadows X, Inc.
D.R. Horton, Inc - New Jersey
Signature Title Date
- --------- ----- ----
/s/ Donald R. Horton Chairman of the Board, Chief Executive
Officer (Principal Executive Officer) June 2, 1997
----------------------
Donald R. Horton
/s/ Richard Beckwitt Director, Vice Chairman June 2, 1997
----------------------
Richard Beckwitt
/s/ David J. Keller Treasurer (Principal Accounting
and Financial Officer) June 2, 1997
---------------------
David J. Keller
D.R. Horton, Inc - Greensboro
Signature Title Date
- --------- ----- ----
/s/ Donald R. Horton Chairman of the Board, President
(Principal Executive Officer) June 2, 1997
----------------------
Donald R. Horton
Director, Co-President
- ------------------------
Robert C. Rapp, Jr.
/s/ David J. Keller Director, Vice President, Treasurer
- -------------------
(Principal Accounting and Financial Officer) June 2, 1997
David J. Keller
Meadows II, Ltd.
Meadows III, Ltd.
Signature Title Date
- --------- ----- ----
/s/ Donald R. Horton Chairman of the Board, President
(Principal Executive Officer) June 2, 1997
----------------------
Donald R. Horton
/s/ David J. Keller Director, Vice President, Treasurer
-------------------
(Principal Accounting and Financial Officer) June 2, 1997
David J. Keller
__________________________Director, Vice President
Mark A. Ferrucci
II-9
<PAGE>
Meadows I, Ltd., the general partner of
D.R. Hortion Management Company, Ltd.
D.R. Horton - Texas, Ltd.
D.R. Horton - Royalty, Ltd.
Signature Title Date
- --------- ----- ----
/s/ Donald R. Horton Chairman of the Board, President
(Principal Executive Officer) June 2, 1997
----------------------
Donald R. Horton
/s/ David J. Keller Director, Treasurer (Principal
Accounting and Financial Officer) June 2, 1997
---------------------
David J. Keller
Meadows IX, Inc., a member of
Meadows X, Inc., a member of
SGS Comminuties at Grand Quay, LLC.
Signature Title Date
- --------- ----- ----
/s/ Donald R. Horton Chairman of the Board, Chief
Executive Officer (Principal
Executive Officer) June 2, 1997
----------------------
Donald R. Horton
/s/ Richard Beckwitt Director, Vice Chairman June 2, 1997
----------------------
Richard Beckwitt
/s/ David J. Keller Treasurer (Principal Accounting
and Financial Officer) June 2, 1997
---------------------
David J. Keller
II-10
<PAGE>
EXHIBIT INDEX
(a) Exhibits:
Exhibit
Number Exhibits
------ --------
*1.1 - Form of Underwriting Agreement
**4.1(a) - Form of Senior Debt Securities Indenture (including
form of notes)
4.1(b) - Form of Senior Subordinated Debt Securities Indenture
(including form of notes)
4.1(c) - Form of Subordinated Debt Securities Indenture (including
form of notes)
4.2 - Amended and Restated Certificate of Incorporation,
as amended, of the Company (incorporated by reference
from Exhibit 3.1 to the Company's Annual Report on Form
10-K for the fiscal year ended September 30, 1995)
4.3 - Amended and Restated Bylaws of the Company (incorporated
by reference from Exhibit 3.1 to the Company's Quarterly
Report on Form 10-Q for the fiscal quarter ended
March 31, 1997)
5.1 - Opinion of Gibson, Dunn & Crutcher LLP, Dallas, Texas, as
to the validity of the Securities being registered
**12.1 - Statement of computation of ratios of earnings to fixed
charges
23.1 - Consent of Gibson, Dunn & Crutcher LLP, Dallas, Texas
(See Exhibit 5.1)
23.2 - Consent of Ernst & Young LLP, Fort Worth, Texas
23.3 - Consent of Whittington, McLemore, Land, Davis & White,
P.C., Rome, Georgia
**24.1 - Powers of Attorney (See signature page of this
Registration Statement)
25.1 - Statement of eligibility of trustee on Form T-1
- -----------
* To be filed by amendment pursuant to a Current Report on Form 8-K to be
incorporated herein by reference.
** Previously filed.
<PAGE>
EXHIBIT 4.1(b)
================================================================================
================================================================================
D.R. HORTON, INC. AND THE GUARANTORS NAMED HEREIN
Senior Subordinated Debt Securities
----------------------
Indenture
Dated as of , 1997
----------------------
, Trustee
================================================================================
================================================================================
CROSS-REFERENCE TABLE
This Cross-Reference Table is not a part of the Indenture.
------------------------------------------
TIA Indenture
Section Section
- ------- -------
310(a)(1) 7.10
(a)(2) 7.10
(a)(3) N.A.
(a)(4) N.A.
(b) 7.08; 7.10; 11.02
311(a) 7.11
(b) 7.11
(c) N.A.
312(a) 2.05
(b) 11.03
(c) 11.03
313(a) 7.06
(b)(1) N.A.
(b)(2) 7.06
(c) 11.02
(d) 7.06
314(a) 4.02; 11.02
(b) N.A.
(c)(1) 11.04
(c)(2) 11.04
(c)(3) N.A.
(d) N.A.
(e) 11.05
315(a) 7.01(b)
(b) 7.05; 11.02
(c) 7.01(a)
(d) 7.01(c)
(e) 6.11
316(a)(last sentence) 11.06
(a)(1)(A) 6.05
(a)(1)(B) 6.04
(a)(2) N.A.
(b) 6.07
317(a)(1) 6.08
(a)(2) 6.09
(b) 2.04
318(a) 11.01
- ---------------------------
N.A. means Not Applicable.
<PAGE>
TABLE OF CONTENTS
This Table of Contents is not a part of the Indenture.
---------------------------
Page
----
ARTICLE ONE
Definitions and Incorporation by Reference
Section 1.01 Definitions 1
Section 1.02 Other Definitions 13
Section 1.03 Incorporation by Reference of Trust Indenture Act 13
Section 1.04 Rules of Construction 13
ARTICLE TWO
The Securities
Section 2.01 Form and Dating 14
Section 2.02 Execution and Authentication 16
Section 2.03 Registrar and Paying Agent 16
Section 2.04 Paying Agent to Hold Money in Trust 17
Section 2.05 Securityholder Lists 17
Section 2.06 Transfer and Exchange 18
Section 2.07 Replacement Securities 18
Section 2.08 Outstanding Securities 19
Section 2.09 Temporary Securities 19
Section 2.10 Cancellation 19
Section 2.11 Defaulted Interest 20
Section 2.12 Treasury Securities 20
Section 2.13 CUSIP Numbers 20
Section 2.14 Deposit of Moneys 21
Section 2.15 Book-Entry Provisions for Global Security 21
ARTICLE THREE
Redemption
Section 3.01 Notices to Trustee 22
Section 3.02 Selection of Securities to be Redeemed 23
Section 3.03 Notice of Redemption 23
<PAGE>
Page
----
Section 3.04 Effect of Notice of Redemption 24
Section 3.05 Deposit of Redemption Price 24
Section 3.06 Securities Redeemed in Part 24
ARTICLE FOUR
Covenants
Section 4.01 Payment of Securities 25
Section 4.02 Maintenance of Office or Agency 25
Section 4.03 Compliance Certificate 25
Section 4.04 Payment of Taxes; Maintenance of
Corporate Existence; Maintenance of
Properties 25
Section 4.05 Additional Guarantors 27
Section 4.06 Limitation on Senior Subordinated Indebtedness 27
ARTICLE FIVE
Successor Corporation
Section 5.01 When Company May Merge, etc. 28
ARTICLE SIX
Defaults and Remedies
Section 6.01 Events of Default 28
Section 6.02 Acceleration 31
Section 6.03 Other Remedies 32
Section 6.04 Waiver of Existing Defaults 32
Section 6.05 Control by Majority 32
Section 6.06 Limitation on Suits 32
Section 6.07 Rights of Holders to Receive Payment 33
Section 6.08 Collection Suit by Trustee 33
Section 6.09 Trustee May File Proofs of Claim 33
Section 6.10 Priorities 34
Section 6.11 Undertaking for Costs 34
<PAGE>
Page
----
ARTICLE SEVEN
Trustee
Section 7.01 Duties of Trustee 35
Section 7.02 Rights of Trustee 36
Section 7.03 Individual Rights of Trustee 37
Section 7.04 Trustee's Disclaimer 37
Section 7.05 Notice of Defaults 38
Section 7.06 Reports by Trustee to Holders 38
Section 7.07 Compensation and Indemnity 38
Section 7.08 Replacement of Trustee 39
Section 7.09 Successor Trustee by Merger, etc. 40
Section 7.10 Eligibility; Disqualification 40
Section 7.11 Preferential Collection of Claims Against Company 40
ARTICLE EIGHT
Discharge of Indenture
Section 8.01 Defeasance up on Deposit of Moneys or U.S
Government Obligations 41
Section 8.02 Survival of the Company's Obligations 45
Section 8.03 Application of Trust Money 45
Section 8.04 Repayment to the Company 45
Section 8.05 Reinstatement 46
ARTICLE NINE
GUARANTEES
Section 9.01 Unconditional Guarantees 46
Section 9.02 Severability 47
Section 9.03 Release of a Guarantor 48
Section 9.04 Limitation of a Guarantor's Liability 48
Section 9.05 Guarantors May Consolidate, etc., on Certain Terms 49
Section 9.06 Contribution 49
Section 9.07 Waiver of Subrogation 50
Section 9.08 Execution of Guarantee 50
<PAGE>
Page
----
ARTICLE TEN
Amendments, Supplements and Waivers
Section 10.01 Without Consent of Holders 51
Section 10.02 With Consent of Holders 52
Section 10.03 Compliance with Trust Indenture Act 53
Section 10.04 Revocation and Effect of Consents 53
Section 10.05 Notation on or Exchange of Securities 54
Section 10.06 Trustee to Sign Amendments, etc. 54
ARTICLE ELEVEN
Miscellaneous
Section 11.01 Trust Indenture Act Controls 55
Section 11.02 Notices 55
Section 11.03 Communications by Holders with Other Holders 56
Section 11.04 Certificate and Opinion as to Conditions Precedent 56
Section 11.05 Statements Required in Certificate or Opinion 56
Section 11.06 Rules by Trustee and Agents 57
Section 11.07 Legal Holidays 57
Section 11.08 Governing Law 57
Section 11.09 No Adverse Interpretation of Other Agreements 57
Section 11.10 No Recourse Against Others 58
Section 11.11 Successors and Assigns 58
Section 11.12 Duplicate Originals 58
Section 11.13 Severability 58
ARTICLE TWELVE
Subordination of Securities
Section 12 01 Securities Subordinated to
Senior Indebtedness 58
Section 12.02 No Payment on Securities in Certain
Circumstances. 59
<PAGE>
Page
----
Section 12.03 Payment Over of Proceeds upon Dissolution, etc. 60
Section 12.04 Subrogation 62
Section 12.05 Obligations of Company Unconditional 62
Section 12.06 Notice to Trustee 63
Section 12.07 Reliance on Judicial Order or Certificate
of Liquidating Agent 64
Section 12.08 Trustee's Relation to Senior Indebtedness 65
Section 12.09 Subordination Rights Not Impaired by Acts
or Omissions of the Company or Holders of
Senior Indebtedness. 65
Section 12.10 Securityholders Authorize Trustee To
Effectuate Subordination of Securities. 65
Section 12.11 This Article Not to Prevent Events of Default 66
Section 12.12 Trustee's Compensation Not Prejudiced 66
Section 12.13 No Waiver of Subordination Provisions 66
Section 12.14 Certain Payments May Be Paid Prior to Dissolution 67
ARTICLE THIRTEEN
Subordination of Guarantee
Section 13.01 Guarantee Obligations Subordinated to
Guarantor Senior Indebtedness 67
Section 13.02 No Payment on Guarantees in Certain Circumstances. 68
Section 13.03 Payment Over of Proceeds upon Dissolution, etc. 69
SectioN 13.04 Subrogation 71
Section 13.05 Obligations of Guarantors Unconditional. 72
Section 13.06 Notice to Trustee 72
Section13.07 Reliance on Judicial Order or Certificate
of Liquidating Agent. 74
Section 13.08 Trustee's Relation to Guarantor Senior
Indebtedness 74
Section 13.09 Subordination Rights Not Impaired by Acts
or Omissions of the Guarantors or Holders of
Guarantor Senior Indebtedness 75
Section 13.10 Securityholders Authorize Trustee to Effectuate
Subordination of Guarantee 75
Section 13.11 This Article Not to Prevent Events of Default 75
Section 13.12 Trustee's Compensation Not Prejudiced 75
Section 13.13 No Waiver of Guarantee Subordination Provisions 76
<PAGE>
Page
----
Section 13.14 Certain Payments May Be Paid Prior to
Dissolution. 76
Signatures 77
EXHIBIT A - Form of Security
<PAGE>
INDENTURE dated as of , 1997, by and among D.R. HORTON, INC.,
a Delaware corporation (the "Company"), each of the Guarantors (as defined in
Section 1.01 below) and , a (the "Trustee").
Each party agrees as follows for the benefit of the other
party and for the equal and ratable benefit of the Holders of the Company's debt
securities issued under this Indenture (the "Securities"):
ARTICLE ONE
Definitions and Incorporation by Reference
Section 1.01. Definitions.
"Affiliate" means, when used with reference to a specified
person, any Person directly or indirectly controlling or controlled by or under
direct or indirect common control with the Person specified.
"Agent" means any Registrar, Paying Agent or co-Registrar or
agent for service of notices and demands.
"Attributable Debt" means, with respect to any Capitalized
Lease Obligations, the capitalized amount thereof determined in accordance with
GAAP.
"Authorizing Resolution" means a resolution adopted by the
Board of Directors or by an Officer or committee of Officers pursuant to Board
delegation authorizing a Series of Securities.
"Bankruptcy Law" means title 11 of the United States Code, as
amended, or any similar federal or state law for the relief of debtors.
"Board of Directors" means the Board of Directors of the
Company or any authorized committee thereof.
"Capital Stock" means, with respect to any Person, any and all
shares, interests, participations or other equivalents (however designated) of
or in such Person's capital stock or other equity interests, and options, rights
or warrants to purchase such capital stock or other equity interests, whether
now outstanding or issued after the applicable Issue Date, including, without
limitation, all Disqualified Stock and Preferred Stock.
"Capitalized Lease Obligations" of any Person means the
obligations of such Person to pay rent or other amounts under a lease that is
required to be capitalized for financial reporting purposes in accordance with
GAAP, and the amount of such obligations will be the capitalized amount thereof
determined in accordance with GAAP.
"Change of Control Provisions" has the meaning set forth in
the definition of "Disqualified Stock" below.
"Company" means the party named as such in this Indenture
until a successor replaces it pursuant to the Indenture and thereafter means the
successor.
"Currency Agreement" of any Person means any foreign exchange
contract, currency swap agreement or other similar agreement or arrangement
designed to protect such Person or any of its Subsidiaries against fluctuations
in currency values.
"Default" means any event, act or condition that is, or after
notice or the passage of time or both would be, an Event of Default.
"Designated Guarantor Senior Indebtedness" means, with respect
to any Guarantor, any Guarantor Senior Indebtedness of such Guarantor which, at
the time of determination, has an aggregate principal amount outstanding of at
least $25.0 million if the instrument governing such Guarantor Senior
Indebtedness expressly states that such Indebtedness is "Guarantor Senior
Indebtedness" for purposes of this Indenture and a Board Resolution setting
forth such designation by the Company has been filed with the Trustee.
"Designated Senior Indebtedness" means any Senior Indebtedness
which, at the time of determination, has an aggregate principal amount
outstanding of at least $25.0 million if the instrument governing such Senior
Indebtedness expressly states that such Indebtedness is "Designated Senior
Indebtedness" for purposes of this Indenture and a Board Resolution setting
forth such designation by the Company has been filed with the Trustee.
"Disqualified Stock" means any Capital Stock that, by its
terms (or by the terms of any security into which it is convertible or for which
it is exchangeable), or upon the happening of any event, (i) matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or
is redeemable at the option of the holder thereof, in whole or in part, on or
prior to the final maturity date of the Securities of the applicable Series or
(ii) is convertible into or exchangeable or exercisable for (whether at the
option of the issuer or the holder thereof) (a) debt securities or (b) any
Capital Stock referred to in (i) above, in each case, at any time prior to the
final maturity date of the Securities of the applicable Series; provided,
however, that any Capital Stock that would not constitute Disqualified Stock but
for provisions thereof giving holders thereof (or the holders of any security
into or for which such Capital Stock is convertible, exchangeable or
exercisable) the right to require the Company to repurchase or redeem such
Capital Stock upon the occurrence of a change in control occurring prior to the
final maturity date of the Securities of the applicable Series shall not
constitute Disqualified Stock if the change in control provisions applicable to
such Capital Stock are no more favorable to such holders than any provisions
described in the Authorizing Resolution or supplemental indenture pertaining to
the Securities of the applicable Series ("Change of Control Provisions") and
such Capital Stock specifically provides that the Company will not repurchase or
redeem any such Capital Stock pursuant to such provisions prior to the Company's
repurchase of the Securities of the applicable Series to the extent required
pursuant to any such Change of Control Provisions.
"GAAP" means generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment of
the accounting profession of the United States, as in effect on the date of this
Indenture.
"Guarantee" means the guarantee of Securities of any
applicable Series by each Guarantor under this Indenture.
"Guarantor Senior Indebtedness" means, with respect to any
Guarantor, at any date, (a) all Indebtedness of such Guarantor for borrowed
money, including principal, premium, if any, and interest (including
Post-Petition Interest) on such Indebtedness, unless the instrument under which
such Indebtedness of such Guarantor for money borrowed is incurred expressly
provides that such Indebtedness for money borrowed is not senior or superior in
right of payment to such Guarantor's Guarantee of the Securities of the
applicable Series, and all renewals, extensions, modifications, amendments or
refinancings thereof; (b) all obligations of such Guarantor under Interest
Protection Agreements, and (c) all obligations of such Guaran tor under Currency
Agreements. Notwithstanding the foregoing, Guarantor Senior Indebtedness shall
not include (a) to the extent that it may constitute Indebtedness, any
obligation for federal, state, local or other taxes; (b) any Indebtedness
between such Guarantor and any Subsidiary of such Guarantor or any Unrestricted
Subsidiary of the Company; (c) to the extent that it may constitute
Indebtedness, any obligation in respect of any trade payable incurred for the
purchase of goods or materials, or for services obtained, in the ordinary course
of business; (d) that portion of any Indebtedness that is incurred in violation
of this Indenture; (e) Indebtedness evidenced by such Guarantor's Guarantee of
the Securities; (f) Indebtedness of such Guarantor that is expressly subordinate
or junior in right of payment to any other Indebtedness of such Guarantor; (g)
to the extent that it may constitute Indebtedness, any obligation owing under
leases (other than Capitalized Lease Obligations); and (h) any obligation that
by operation of law is subordinated to any general unsecured obligations of such
Guarantor.
"Guarantors" means (i) initially on the execution of this
Indenture, each of: D.R. Horton Management Company, Ltd., a Texas limited
partnership; DRHI, Inc., a Delaware corporation; D.R. Horton-Royalty, Ltd., a
Texas limited partnership; DRH Construction, Inc., a Delaware corporation; DRH
New Mexico Construction, Inc., a Delaware corporation; D.R. Horton Denver
Management Company, Inc., a Colorado corporation; D.R. Horton Denver No. 10,
Inc., a Colorado corporation; D.R. Horton Denver No. 11, Inc., a Colorado
corporation; D.R. Horton Denver No. 12, Inc., a Colorado corporation; D.R.
Horton Denver No. 13, Inc., a Colorado corporation; D.R. Horton Denver No. 14,
Inc., a Colorado corporation; D.R. Horton Denver No. 15, Inc., a Colorado
corporation; D.R. Horton Denver No. 16, Inc., a Colorado corporation; D.R.
Horton Denver No. 17, Inc., a Colorado corporation; D.R. Horton Denver No. 18,
Inc., a Colorado corporation; D.R. Horton, Inc., Albuquerque, a Delaware
corporation; D.R. Horton, Inc., Denver, a Delaware corporation; D.R. Horton,
Inc., Minnesota, a Delaware corporation; D.R. Horton, Inc., New Jersey, a New
Jersey corporation; Meadows I, Ltd., a Delaware corporation; Meadows II, Ltd., a
Delaware corporation; Meadows III, Ltd., a Delaware corporation; Meadows IX ,
Inc., a New Jersey corporation; Meadows X, Inc., a New Jersey corporation; SGS
Communities at Grande Quary, L.L.C., a New Jersey limited liability company;
D.R. Horton Los Angeles Holding Company, Inc., a California corporation; D.R.
Horton Los Angeles Management Company, Inc., a California corporation; D.R.
Horton Los Angeles No. 9, Inc., a California corporation; D.R. Horton Los
Angeles No. 10, Inc., a California corporation; D.R. Horton Los Angeles No. 11,
Inc., a California corporation; D.R. Horton Los Angeles No. 12, Inc., a
California corporation; D.R. Horton Los Angeles No. 13, Inc., a California
corporation; D.R. Horton Los Angeles No. 14, Inc., a California corporation;
D.R. Horton Los Angeles No. 16, Inc., a California corporation; D.R. Horton Los
Angeles No. 17, Inc., a California corporation; D.R. Horton, Inc. - Birmingham,
a Delaware corporation; D.R. Horton, Inc. - Greensboro, a Delaware corporation;
D.R. Horton San Diego Holding Company, Inc., a California corporation; D.R.
Horton San Diego Management Company, Inc., a California corporation; D.R. Horton
San Diego No. 9, Inc., a California corporation; D.R. Horton San Diego No. 10,
Inc., a California corporation; D.R. Horton San Diego No. 11, Inc., a California
corporation; D.R. Horton San Diego No. 12, Inc., a California corporation; D.R.
Horton San Diego No. 13, Inc., a California corporation; D.R. Horton San Diego
No. 14, Inc., a California corporation; D.R. Horton San Diego No. 15, Inc., a
California corporation; D.R. Horton San Diego No. 16, Inc., a California
corporation; D.R. Horton San Diego No. 17, Inc., a California corporation; D.R.
Horton San Diego No. 18, Inc., a California corporation; D.R. Horton San Diego
No. 19, Inc., a California corporation; D.R. Horton San Diego No. 20, Inc., a
California corporation; D.R. Horton San Diego No. 21, Inc., a California
corporation; D.R. Horton Texas, Ltd., a Texas limited partnership; D.R. Horton,
Inc. - Torrey, a Delaware corporation; and S.G. Torrey of Atlanta, Ltd., a
Georgia corporation; and (ii) each of the Company's Subsidiaries which becomes a
guarantor of Securities pursuant to the provisions of this Indenture. An
Unrestricted Subsidiary may become a Guarantor if it is so designated by
resolution of the Board of Directors of the Company.
"Holder" or "Securityholder" means the person in whose name a
Security is registered on the Registrar's books.
"Indebtedness" of any Person means, without duplication, (i)
any liability of such Person (a) for borrowed money or under any reimbursement
obligation relating to a letter of credit or other similar instruments (other
than standby letters of credit issued for the benefit of or surety, performance,
completion or payment bonds, earnest money notes or similar purpose undertakings
or indemnifications issued by, such Person in the ordinary course of business),
(b) evidenced by a bond, note, debenture or similar instrument (including a
purchase money obligation) given in connection with the acquisition of any
businesses, properties or assets of any kind or with services incurred in
connection with capital expenditures (other than any obligation to pay a
contingent purchase price which, as of the date of incurrence thereof is not
required to be re corded as a liability in accordance with GAAP), or (c) in
respect of Capitalized Lease Obligations (to the extent of the Attributable Debt
in respect thereof), (ii) any Indebtedness of others that such Person has
guaranteed to the extent of the guarantee, (iii) to the extent not otherwise
included, the obligations of such Person under Currency Agreements or Interest
Protection Agreements to the extent recorded as liabilities not constituting
Interest Incurred, net of amounts recorded as assets in respect of such
agreements, in accordance with GAAP, and (iv) all Indebtedness of others secured
by a Lien on any asset of such Person, whether or not such Indebtedness is
assumed by such Person; provided, that Indebtedness shall not include accounts
payable, liabilities to trade creditors of such Person or other accrued expenses
arising in the ordinary course of business. The amount of Indebtedness of any
Person at any date shall be (a) the outstanding balance at such date of all
unconditional obligations as described above, net of any unamortized discount to
be accounted for as Interest Expense, in accordance with GAAP, (b) the maximum
liability of such Person for any contingent obligations under clause (ii) above
at such date, net of, any unamortized discount to be accounted for as Interest
Expense in accordance with GAAP and (c) in the case of clause (iv) above, the
lesser of (1) the fair market value of any asset subject to a Lien securing the
Indebtedness of others on the date that the Lien attaches and (2) the amount of
the Indebtedness secured.
"Indenture" means this Indenture as amended or supplemented
from time to time, including pursuant to any Authorizing Resolution or
supplemental indenture pertaining to any Series.
"Insolvency or Liquidation Proceeding" means, with respect to
any Person, any liquidation, dissolution or winding up of such Person, or any
bankruptcy, reorganization, insolvency, receivership or similar proceeding with
respect to such Person, whether voluntary or involuntary.
"Interest Expense" of any Person for any period means, without
duplication, the aggregate amount of (i) interest which, in conformity with
GAAP, would be set opposite the caption "interest expense" or any like caption
on an income statement for such Person (including, without limitation, imputed
interest included in Capitalized Lease Obligations, all commissions, discounts
and other fees and charges owned with respect to letters of credit and bankers'
acceptance financing, the net costs (but reduced by net gains) associated with
Currency Agreements and Interest Protection Agreements, amortization of other
financing fees and expenses, the interest portion of any deferred payment
obligation, amortization of discount or premium, if any, and all other noncash
interest expense other than interest and other charges amortized to cost of
sales), and (ii) all interest actually paid by the Company or a Restricted
Subsidiary under any guarantee of Indebtedness (including, without limitation, a
guarantee of principal, interest or any combination thereof) of any Person other
than the Company or any Restricted Subsidiary during such period; provided, that
Interest Expense shall exclude any expense associated with the complete
write-off of financing fees and expenses in connection with the repayment of any
Indebtedness.
"Interest Protection Agreement" of any Person means any
interest rate swap agreement, interest rate collar agreement, option or futures
contract or other similar agreement or arrangement designed to protect such
Person or any of its Subsidiaries against fluctuations in interest rates with
respect to Indebtedness permitted to be incurred under this Indenture.
"Investments" of any Person means (i) all investments by such
Person in any other Person in the form of loans, advances or capital
contributions, (ii) all guarantees of Indebtedness or other obligations of any
other Person by such person, (iii) all purchases (or other acquisitions for
consideration) by such Person of Indebtedness, Capital Stock or other securities
of any other Person and (iv) all other items that would be classified as
investments in any other Person (including, without limitation, purchases of
assets outside the ordinary course of business) on a balance sheet of such
Person prepared in accordance with GAAP.
"Issue Date" means, with respect to any Series of Securities,
the date on which the Securities of such Series are originally issued under this
Indenture.
"Lien" means, with respect to any Property, any mortgage,
lien, pledge, charge, security interest or encumbrance of any kind in respect of
such Property. For purposes of this definition, a Person shall be deemed to own,
subject to a Lien, any Property which it has acquired or holds subject to the
interest of a vendor or lessor under any conditional sale agreement, capital
lease or other title retention agreement relating to such Property.
"Non-Recourse Indebtedness" with respect to any Person means
Indebtedness of such Person for which (i) the sole legal recourse for collection
of principal and interest on such Indebtedness is against the specific property
identified in the instruments evidencing or securing such Indebtedness and such
property was acquired with the proceeds of such Indebtedness or such
Indebtedness was incurred within 90 days after the acquisition of such property
and (ii) no other assets of such Person may be realized upon in collection of
principal or interest on such Indebtedness. Indebtedness which is otherwise
Non-Recourse Indebtedness will not lose its character as Non-Recourse
Indebtedness because there is recourse to the borrower, any guarantor or any
other Person for (i) environmental warranties and indemnities, or (ii)
indemnities for and liabilities arising from fraud, misrepresentation,
misapplication or non-payment of rents, profits, insurance and condemnation
proceeds and other sums actually received by the borrower from secured assets to
be paid to the lender, waste and mechanics' liens.
"Officer" means the Chairman of the Board, the President, any
Vice President, the Treasurer, the Controller or the Secretary of the Company.
"Officers' Certificate" means a certificate signed by two
Officers or by an Officer and an Assistant Treasurer or an Assistant Secretary
of the Company.
"Opinion of Counsel" means a written opinion from legal
counsel who is reasonably acceptable to the Trustee. The counsel may be an
employee of or counsel to the Company or the Trustee.
"Permitted Junior Securities" means any securities of the
Company or any other Person that are (i) equity securities or (ii) subordinated
in right of payment to all Senior Indebtedness or Guarantor Senior Indebtedness,
as the case may be, that may at the time be outstanding, to substantially the
same extent as, or to a greater extent than, the Securities are subordinated as
provided in this Indenture, in any event pursuant to a court order so providing
and as to which (a) the rate of interest on such securities shall not exceed the
effective rate of interest on the Securities on the date of this Indenture, (b)
such securities shall not be entitled to the benefits of covenants or defaults
materially more beneficial to the holders of such securities than those in
effect with respect to the Securities on the date of this Indenture and (c) such
securities shall not provide for amortization (including sinking fund and
mandatory prepayment provisions) commencing prior to the date six months
following the final scheduled maturity date of the Senior Indebtedness or
Guarantor Senior Indebtedness, as the case may be (as modified by the plan of
reorganization or readjustment pursuant to which such securities are issued).
"Person" means any individual, corporation, partnership,
limited liability company, joint venture, incorporated or unincorporated
association, joint stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Post-Petition Interest" means, with respect to any Senior
Indebtedness or Guarantor Senior Indebtedness of any Person, all interest
accrued or accruing on such Indebtedness after the commencement of any
Insolvency or Liquidation Proceeding against such Person in accordance with and
at the contract rate (including, without limitation, any rate applicable upon
default) specified in the agreement or instrument creating, evidencing or
governing such Indebtedness, whether or not, pursuant to applicable law or
otherwise, the claim for such interest is allowed as a claim in such Insolvency
or Liquidation Proceeding.
"Preferred Stock" of any Person means all Capital Stock of
such Person which has a preference in liquidation or with respect to the payment
of dividends.
"principal" of a debt security means the principal of the
security plus, when appropriate, the premium, if any, on the security.
"Property" of any Person means all types of real, personal,
tangible, intangible or mixed property owned by such Person, whether or not
included in the most recent consolidated balance sheet of such Person and its
Subsidiaries under GAAP.
"Restricted Subsidiary" means any Subsidiary of the Company
which is not an Unrestricted Subsidiary.
"SEC" means the Securities and Exchange Commission or any
successor agency performing the duties now assigned to it under the TIA.
"Securities" means any Securities that are issued under this
Indenture.
"Senior Indebtedness" means, at any date, (a) all Indebtedness
of the Company for borrowed money, including principal, premium, if any, and
interest (including Post-Petition Interest) on such Indebtedness, unless the
instrument under which such Indebtedness of the Company for money borrowed is
incurred expressly provides that such Indebtedness for money borrowed is not
senior or superior in right of payment to the Securities of the applicable
Series, and all renewals, extensions, modifications, amendments or refinancings
thereof; (b) all obligations of the Company under Interest Protection
Agreements, and (c) all obligations of the Company under Currency Agreements.
Notwithstanding the foregoing, Senior Indebtedness shall not include (a) to the
extent that it may constitute Indebtedness, any obligation for federal, state,
local or other taxes; (b) any Indebtedness between the Company and any
Subsidiary of the Company; (c) to the extent that it may constitute
Indebtedness, any obligation in respect of any trade payable incurred for the
purchase of goods or materials, or for services obtained, in the ordinary course
of business; (d) that portion of any Indebtedness that is incurred in violation
of this Indenture; (e) Indebtedness evidenced by the Securities; (f)
Indebtedness of the Company that is expressly subordinate or junior in right of
payment to any other Indebtedness of the Company; (g) to the extent that it may
constitute Indebtedness, any obligation owing under leases (other than
Capitalized Lease Obligations); and (h) any obligation that by operation of law
is subordinate to any general unsecured obligations of the Company.
"Series" means a series of Securities established under this
Indenture.
"Significant Subsidiary" means any Subsidiary of the Company
which would constitute a "significant subsidiary" as defined in Rule 1.02 of
Regulation S-X under the Securities Act and the Exchange Act.
"Subsidiary" of any Person means any corporation or other
entity of which a majority of the Capital Stock having ordinary voting power to
elect a majority of the Board of Directors or other persons performing similar
functions is at the time directly or indirectly owned or controlled by such
Person.
"TIA" means the Trust Indenture Act of 1939, as in effect from
time to time.
"Trustee" means the party named as such in this Indenture
until a successor replaces it pursuant to this Indenture and thereafter means
the successor serving hereunder.
"Trust Officer" means the Chairman of the Board, the
President, any Vice President or any other officer or assistant officer of the
Trustee assigned by the Trustee to administer its corporate trust matters.
"United States" means the United States of America.
"U.S. government obligations" means securities which are (i)
direct obligations of the United States for the payment of which its full faith
and credit is pledged or (ii) obligations of a person controlled or supervised
by and acting as an agency or instrumentality of the United States the payment
of which is unconditionally guaranteed as a full faith and credit obligation by
the United States, which, in either case are not callable or redeemable at the
option of the issuer thereof, and shall also include a depositary receipt issued
by a bank or trust company as custodian with respect to any such U.S. government
obligations or a specific payment of interest on or principal of any such U.S.
government obligation held by such custodian for the account of the holder of a
depositary receipt; provided that (except as required by law) such custodian is
not authorized to make any deduction from the amount payable to the holder of
such depositary receipt from any amount received by the custodian in respect of
the U.S. government obligation or the specific payment of interest on or
principal of the U.S. government obligation evidenced by such depositary
receipt.
"Unrestricted Subsidiary" means any Subsidiary of the Company
so designated by a resolution adopted by the Board of Directors of the Company
as provided below; provided that (a) the holders of Indebtedness thereof do not
have direct or indirect recourse against the Company or any Restricted
Subsidiary, and neither the Company nor any Restricted Subsidiary otherwise has
liability, for any payment obligations in respect of such Indebtedness
(including any undertaking, agreement or instrument evidencing such
Indebtedness), except, (i) in each case, to the extent that the amount thereof
constitutes a "restricted payment" permitted to be made under any provisions set
forth limiting the making or paying of a "restricted payment" under the
Authorizing Resolution or supplemental indenture pertaining to an applicable
Series ("Restricted Payment Provisions"), (ii) in the case of Non-Recourse
Indebtedness, to the extent such recourse or liability is for the matters
discussed in the last sentence of the definition of "Non-Recourse Indebtedness,"
or (iii) to the extent such Indebtedness is a guarantee by such Subsidiary of
Indebtedness of the Company or a Restricted Subsidiary and (b) no holder of any
Indebtedness of such Subsidiary shall have a right to declare a default on such
Indebtedness or cause the payment thereof to be accelerated or payable prior to
its stated maturity as a result of a default on any Indebtedness of the Company
or any Restricted Subsidiary. Subject to the foregoing, the Board of Directors
of the Company may designate any Subsidiary to be an Unrestricted Subsidiary;
provided, however, that (i) the net amount (the "Designation Amount") then
outstanding of all previous Investments by the Company and the Restricted
Subsidiaries in such Subsidiary will be deemed to be a "restricted payment"
pursuant to any Restricted Payment Provisions at the time of such designation
and will reduce the amount available for other restricted payments under any
Restricted Payment Provisions, to the extent provided therein, (ii) the Company
must be permitted under any Restricted Payment Provisions to make the
"restricted payment" deemed to have been made pursuant to clause (i), and (iii)
after giving effect to such designation, no Default or Event of Default shall
have occurred and be continuing. The Board of Directors of the Company may also
redesignate an Unrestricted Subsidiary to be a Restricted Subsidiary; provided,
however, that (i) the Indebtedness of such Unrestricted Subsidiary as of the
date of such redesignation could then be incurred under any provisions set forth
limiting the incurrence of Indebtedness under the Authorizing Resolution or
supplemental indenture pertaining to an applicable Series ("Debt Limitation
Provisions"), (ii) immediately after giving effect to such redesignation and the
incurrence of any such additional Indebtedness, the Company and the Restricted
Subsidiaries could incur $1.00 of additional Indebtedness under any debt
incurrence covenant ratio set forth in any Debt Limitation Provisions and (iii)
the Liens of such Unrestricted Subsidiary as of the date of such redesignation
could then be incurred in accordance with any provisions set forth limiting the
creation or existence of Liens under the Authorizing Resolution or supplemental
indenture pertaining to an applicable Series ("Lien Limitation Provisions"). Any
such designation or redesignation by the Board of Directors of the Company will
be evidenced to the Trustee by the filing with the Trustee of a certified copy
of the resolution of the Board of Directors of the Company giving effect to such
designation or redesignation and an Officers' Certificate certifying that such
designation or redesignation complied with the foregoing conditions and setting
forth the underlying calculations of such Officers' Certificate. The designation
of any Person as an Unrestricted Subsidiary shall be deemed to include a
designation of all Subsidiaries of such Person as Unrestricted Subsidiaries;
provided, however, that the ownership of the general partnership interest or a
similar member's interest in a limited liability company by an Unrestricted
Subsidiary shall not cause a Subsidiary of the Company of which more than 95% of
the equity interest is held by the Company or one or more Restricted
Subsidiaries to be deemed an Unrestricted Subsidiary.
Section 1.02. Other Definitions.
Term Defined in
- ---- ----------
"Agent Members".................................. 2.15
"Business Day"................................... 11.07
"Custodian"...................................... 6.01
"Depository"..................................... 2.15
"Event of Default"............................... 6.01
"Legal Holiday".................................. 11.07
"Paying Agent"................................... 2.03
"Registrar"...................................... 2.03
Section 1.03. Incorporation by Reference of Trust
Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in and made a part of this Indenture. The
following TIA terms used in this Indenture have the following meanings:
"Commission" means the SEC.
"indenture securities" means the Securities.
"indenture security holder" means a Securityholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the
Trustee.
"obligor" on the indenture securities means the Company, each
of the Guarantors, or any other obligor on the Securities of a Series or any
Guarantees thereof.
All other TIA terms used in this Indenture that are defined by
the TIA, defined by TIA reference to another statute or defined by SEC rule have
the meanings so assigned to them.
Section 1.04. Rules of Construction.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the
meaning assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the
plural include the singular; and
(5) provisions apply to successive events and trans-
actions.
ARTICLE TWO
The Securities
Section 2.01. Form and Dating.
The aggregate principal amount of Securities that may be
issued under this Indenture is unlimited. The Securities may be issued from time
to time in one or more Series. Each Series shall be created by an Authorizing
Resolution or a supplemental indenture that establishes the terms of the Series,
which may include the following:
(1) the title of the Series;
(2) the aggregate principal amount (or any limit on the
aggregate principal amount) of the Series and, if any Securities of a Series are
to be issued at a discount from their face amount, the method of computing the
accretion of such discount;
(3) the interest rate or method of calculation of the
interest rate;
(4) the date from which interest will accrue;
(5) the record dates for interest payable on Securities of
the Series;
(6) the dates when, places where and manner in which
principal and interest are payable;
(7) the Registrar and Paying Agent;
(8) the terms of any mandatory (including any sinking fund
requirements) or optional redemption by the Company;
(9) the terms of any redemption at the option of Holders;
(10) the denominations in which Securities are issuable;
(11) whether Securities will be issued in registered or
bearer form and the terms of any such forms of Securities;
(12) whether any Securities will be represented by a global
Security and the terms of any such global Security;
(13) the currency or currencies (including any composite
currency) in which principal or interest or both may be paid;
(14) if payments of principal or interest may be made in a
currency other than that in which Securities are denominated, the manner for
determining such payments;
(15) provisions for electronic issuance of Securities or
issuance of Securities in uncertificated form;
(16) any Events of Default, covenants and/or defined terms
in addition to or in lieu of those set forth in this Indenture;
(17) whether and upon what terms Securities may be defeased
if different from the provisions set forth in this Indenture;
(18) the form of the Securities, which, unless the
Authorizing Resolution or supplemental indenture otherwise provides, shall be in
the form of Exhibit A;
(19) any terms that may be required by or advisable under
applicable law;
(20) the percentage of the principal amount of the
Securities which is payable if the maturity of the Securities is accelerated in
the case of Securities issued at a discount from their face amount;
(21) whether any Securities will not have Guarantees; and
(22) any other terms in addition to or different from those
contained in this Indenture.
All Securities of one Series need not be issued at the same
time and, unless otherwise provided, a Series may be reopened for issuances of
additional Securities of such Series pursuant to an Authorizing Resolution, an
Officers' Certificate or in any indenture supplemental hereto.
The creation and issuance of a Series and the authentication
and delivery thereof are not subject to any conditions precedent.
Section 2.02. Execution and Authentication.
Two Officers shall sign the Securities for the Company by
manual or facsimile signature. The Company's seal shall be reproduced on the
Securities. Each Guarantor shall execute the Guarantee in the manner set forth
in Section 9.08.
If an Officer whose signature is on a Security no longer holds
that office at the time the Trustee authenticates the Security, the Security
shall nevertheless be valid.
A Security shall not be valid until the Trustee manually signs
the certificate of authentication on the Security. The signature shall be
conclusive evidence that the Security has been authenticated under this
Indenture.
The Trustee shall authenticate Securities for original issue
upon receipt of an Officers' Certificate of the Company. Each Security shall be
dated the date of its authentication.
Section 2.03. Registrar and Paying Agent.
The Company shall maintain an office or agency where
Securities may be presented for registration of transfer or for exchange
("Registrar"), an office or agency where Securities may be presented for payment
("Paying Agent") and an office or agency where notices and demands to or upon
the Company in respect of the Securities and this Indenture may be served. The
Registrar shall keep a register of the Securities and of their transfer and
exchange. The Company may have one or more co-Registrars and one or more
additional paying agents. The term "Paying Agent" includes any additional paying
agent.
The Company shall enter into an appropriate agency agreement
with any Agent not a party to this Indenture. The agreement shall implement the
provisions of this Indenture that relate to such Agent. The Company shall
promptly notify the Trustee in writing of the name and address of any such Agent
and the Trustee shall have the right to inspect the Securities register at all
reasonable times to obtain copies thereof, and the Trustee shall have the right
to rely upon such register as to the names and addresses of the Holders and the
principal amounts and certificate numbers thereof. If the Company fails to
maintain a Registrar or Paying Agent or fails to give the foregoing notice, the
Trustee shall act as such.
The Company initially appoints the Trustee as Registrar and
Paying Agent.
Section 2.04. Paying Agent to Hold Money in Trust.
Each Paying Agent shall hold in trust for the benefit of
Securityholders and the Trustee all money held by the Paying Agent for the
payment of principal of or interest on the Securities, and shall notify the
Trustee of any default by the Company in making any such payment. If the Company
or a Subsidiary acts as Paying Agent, it shall segregate the money and hold it
as a separate trust fund. The Company at any time may require a Paying Agent to
pay all money held by it to the Trustee. Upon doing so the Paying Agent shall
have no further liability for the money.
Section 2.05. Securityholder Lists.
The Trustee shall preserve in as current a form as is
reasonably practicable the most recent list available to it of the names and
addresses of Securityholders. If the Trustee is not the Registrar, the Company
shall furnish to the Trustee at least 7 Business Days before each semiannual
interest payment date and at such other times as the Trustee may request in
writing a list in such form and as of such date as the Trustee may reasonably
require of the names and addresses of Securityholders.
Section 2.06. Transfer and Exchange.
Where a Security is presented to the Registrar or a
co-Registrar with a request to register a transfer, the Registrar shall register
the transfer as requested if the requirements of Section 8-401(1) of the New
York Uniform Commercial Code are met. Where Securities are presented to the
Registrar or a co-Registrar with a request to exchange them for an equal
principal amount of Securities of other denominations, the Registrar shall make
the exchange as requested if the same requirements are met. To permit transfers
and exchanges, the Trustee shall authenticate Securities at the Registrar's
request. The Registrar need not transfer or exchange any Security selected for
redemption, except the unredeemed part thereof if the Security is redeemed in
part, or transfer or exchange any Securities for a period of 15 days before a
selection of Securities to be redeemed. Any exchange or transfer shall be
without charge, except that the Company may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in relation
thereto except in the case of exchanges pursuant to 2.09, 3.06, or 10.05 not
involving any transfer.
Any Holder of a global Security shall, by acceptance of such
global Security, agree that transfers of beneficial interests in such global
Security may be effected only through a book entry system maintained by the
Holder of such global Security (or its agent), and that ownership of a
beneficial interest in the Security shall be required to be reflected in a book
entry.
Section 2.07. Replacement Securities.
If the Holder of a Security claims that the Security has been
lost, destroyed, mutilated or wrongfully taken, the Company shall issue and,
upon written request of any Officer of the Company, the Trustee shall
authenticate a replacement Security, provided in the case of a lost, destroyed
or wrongfully taken Security, that the requirements of Section 8-405 of the New
York Uniform Commercial Code are met. If any such lost, destroyed, mutilated or
wrongfully taken Security shall have matured or shall be about to mature, the
Company may, instead of issuing a substitute Security therefor, pay such
Security without requiring (except in the case of a mutilated Security) the
surrender thereof. An indemnity bond must be sufficient in the judgment of the
Company and the Trustee to protect the Company, the Trustee or any Agent from
any loss which any of them may suffer if a Security is replaced, including the
acquisition of such Security by a bona fide purchaser. The Company or the
Trustee may charge for its expenses in replacing a Security.
Section 2.08. Outstanding Securities.
Securities outstanding at any time are all Securities
authenticated by the Trustee except for those cancelled by it and those
described in this Section. A Security does not cease to be outstanding because
the Company, any Guarantor or one of their Affiliates holds the Security.
If a Security is replaced pursuant to Section 2.07, it ceases
to be outstanding unless the Trustee receives proof satisfactory to it that the
replaced Security is held by a bona fide purchaser.
If the Paying Agent holds on a redemption date or maturity
date money sufficient to pay Securities payable on that date, then on and after
that date such Securities cease to be outstanding and interest on them ceases to
accrue.
Subject to the foregoing provisions of this Section, each
Security delivered under this Indenture upon registration of transfer of or in
exchange for or in lieu of any other Security shall carry the rights to interest
accrued and unpaid, and to accrue, which were carried by such other Security.
Section 2.09. Temporary Securities.
Until definitive Securities are ready for delivery, the
Company may prepare and the Trustee shall authenticate temporary Securities.
Temporary Securities shall be substantially in the form of definitive Securities
but may have variations that the Company considers appropriate for temporary
Securities. Without unreasonable delay, the Company shall prepare and, upon
surrender for cancellation of the temporary Security, the Company and the
Guarantors shall execute and the Trustee shall authenticate definitive
Securities in exchange for temporary Securities. Until so exchanged, the
temporary Securities shall in all respects be entitled to the same benefits
under this Indenture as definitive Securities authenticated and delivered
hereunder.
Section 2.10. Cancellation.
The Company at any time may deliver Securities to the Trustee
for cancellation. The Registrar and Paying Agent shall forward to the Trustee
any Securities surrendered to them for registration of transfer, exchange,
redemption or payment. The Trustee and no one else shall cancel and destroy, or
retain in accordance with its standard retention policy, all Securities
surrendered for registration or transfer, exchange, redemption, paying or
cancellation. Unless the Authorizing Resolution so provides, the Company may not
issue new Securities to replace Securities that it has previously paid or
delivered to the Trustee for cancellation.
Section 2.11. Defaulted Interest.
If the Company defaults in a payment of interest on the
Securities, it shall pay the defaulted interest plus any interest payable on the
defaulted interest to the persons who are Securityholders on a subsequent
special record date. The Company shall fix such special record date and a
payment date which shall be reasonably satisfactory to the Trustee. At least 15
days before such special record date, the Company shall mail to each
Securityholder a notice that states the record date, the payment date and the
amount of defaulted interest to be paid. On or before the date such notice is
mailed, the Company shall deposit with the Paying Agent money sufficient to pay
the amount of defaulted interest to be so paid. The Company may pay defaulted
interest in any other lawful manner if, after notice given by the Company to the
Trustee of the proposed payment, such manner of payment shall be deemed
practicable by the Trustee.
Section 2.12. Treasury Securities.
In determining whether the Holders of the required principal
amount of Securities of a Series have concurred in any direction, waiver,
consent or notice, Securities owned by the Company, the Guarantors or any of
their respective Affiliates shall be considered as though they are not
outstanding, except that for the purposes of determining whether the Trustee
shall be protected in relying on any such direction, waiver or consent, only
Securities which the Trustee actually knows are so owned shall be so considered.
Section 2.13. CUSIP Numbers.
The Company in issuing the Securities of any Series may use a
"CUSIP" number, and if so, the Trustee shall use the CUSIP number in notices of
redemption or exchange as a convenience to Holders of such Securities; provided
that no representation is hereby deemed to be made by the Trustee as to the
correctness or accuracy of any such CUSIP number printed in the notice or on
such Securities, and that reliance may be placed only on the other
identification numbers printed on such Securities. The Company shall promptly
notify the Trustee of any change in any CUSIP number.
Section 2.14. Deposit of Moneys.
Prior to 11:00 a.m. New York City time on each interest
payment date and maturity date with respect to each Series of Securities, the
Company shall have deposited with the Paying Agent in immediately available
funds money sufficient to make cash payments due on such interest payment date
or maturity date, as the case may be, in a timely manner which permits the
Paying Agent to remit payment to the Holders on such interest payment date or
maturity date, as the case may be.
Section 2.15. Book-Entry Provisions for Global
Security.
(a) Any global Security of a Series initially shall (i) be
registered in the name of the depository who shall be identified in the
Authorizing Resolution or supplemental indenture relating to such Securities
(the "Depository") or the nominee of such Depository, (ii) be delivered to the
Trustee as custodian for such Depository and (iii) bear any required legends.
Members of, or participants in, the Depository ("Agent
Members") shall have no rights under this Indenture with respect to any global
Security held on their behalf by the Depository, or the Trustee as its
custodian, or under the global Security, and the Depository may be treated by
the Company, the Trustee and any agent of the Company or the Trustee as the
absolute owner of the global Security for all purposes whatsoever.
Notwithstanding the foregoing, nothing herein shall prevent the Company, the
Trustee or any agent of the Company or the Trustee from giving effect to any
written certification, proxy or other authorization furnished by the Depository
or impair, as between the Depository and its Agent Members, the operation of
customary practices governing the exercise of the rights of a Holder of any
Security.
(b) Transfers of any global Security shall be limited to
transfers in whole, but not in part, to the Depository, its successors or their
respective nominees. Interests of beneficial owners in the global Security may
be transferred or exchanged for definitive Securities in accordance with the
rules and procedures of the Depository. In addition, defini tive Securities
shall be transferred to all beneficial owners in exchange for their beneficial
interests in a global Security if (i) the Depository notifies the Company that
it is unwilling or unable to continue as Depository for the global Security and
a successor depository is not appointed by the Company within 90 days of such
notice or (ii) an Event of Default has occurred and is continuing and the
Registrar has received a request from the Depository to issue definitive
Securities.
(c) In connection with any transfer or exchange of a portion
of the beneficial interest in any global Security to beneficial owners pursuant
to paragraph (b), the Registrar shall (if one or more definitive Securities are
to be issued) reflect on its books and records the date and a decrease in the
principal amount of the global Security in an amount equal to the principal
amount of the beneficial interest in the global Security to be transferred, and
the Company and the Guarantors shall execute, and the Trustee shall authenticate
and deliver, one or more definitive Securities of like tenor and amount.
(d) In connection with the transfer of an entire global
Security to beneficial owners pursuant to paragraph (b), the global Security
shall be deemed to be surrendered to the Trustee for cancellation, and the
Company and the Guarantors shall execute, and the Trustee shall authenticate and
deliver, to each beneficial owner identified by the Depository in exchange for
its beneficial interest in the global Security, an equal aggregate principal
amount of definitive Securities of authorized denominations.
(e) The Holder of any global Security may grant proxies and
otherwise authorize any person, including Agent Members and persons that may
hold interests through Agent Members, to take any action which a Holder is
entitled to take under this Indenture or the Securities of such Series.
ARTICLE THREE
Redemption
Section 3.01. Notices to Trustee.
Securities of a Series that are redeemable prior to maturity
shall be redeemable in accordance with their terms and, unless the Authorizing
Resolution or supplemental indenture provides otherwise, in accordance with this
Article.
If the Company wants to redeem Securities pursuant to
Paragraph 5 of the Securities, it shall notify the Trustee in writing of the
Redemption Date and the principal amount of Securities to be redeemed. Any such
notice may be cancelled at any time prior to notice of such redemption being
mailed to Holders. Any such cancelled notice shall be void and of no effect.
If the Company wants to credit any Securities previously
redeemed, retired or acquired against any redemption pursuant to Paragraph 6 of
the Securities, it shall notify the Trustee of the amount of the credit and it
shall deliver any Securities not previously delivered to the Trustee for
cancellation with such notice.
The Company shall give each notice provided for in this
Section 3.01 at least 30 days before the notice of any such redemption is to be
mailed to Holders (unless a shorter notice shall be satisfactory to the
Trustee).
Section 3.02. Selection of Securities to be Redeemed.
If fewer than all of the Securities of a Series are to be
redeemed, the Trustee shall select the Securities to be redeemed by a method the
Trustee considers fair and appropriate. The Trustee shall make the selection
from Securities outstanding not previously called for redemption and shall
promptly notify the Company of the serial numbers or other identifying
attributes of the Securities so selected. The Trustee may select for redemption
portions of the principal of Securities that have denominations larger than the
minimum denomination for the Series. Securities and portions of them it selects
shall be in amounts equal to the minimum denomination for the Series or an
integral multiple thereof. Provisions of this Indenture that apply to Securities
called for redemption also apply to portions of Securities called for
redemption.
Section 3.03. Notice of Redemption.
At least 30 days but not more than 60 days before a redemption
date, the Company shall mail a notice of redemption by first-class mail, postage
prepaid, to each Holder of Securities to be redeemed.
The notice shall identify the Securities to be redeemed and
shall state:
(1) the redemption date;
(2) the redemption price;
(3) the name and address of the Paying Agent;
(4) that Securities called for redemption must be
surrendered to the Paying Agent to collect the redemption price;
(5) that interest on Securities called for redemption ceases
to accrue on and after the redemption date; and
(6) that the Securities are being redeemed pursuant to the
mandatory redemption or the optional redemption provisions, as applicable.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at its expense; provided, however, that the
Company shall deliver to the Trustee at least 15 days prior to the date on which
notice of redemption is to be mailed or such shorter period as may be
satisfactory to the Trustee, an Officers' Certificate requesting that the
Trustee give such notice and setting forth the information to be stated in such
notice as provided in the preceding paragraph.
Section 3.04. Effect of Notice of Redemption.
Once notice of redemption is mailed, Securities called for
redemption become due and payable on the redemption date and at the redemption
price as set forth in the notice of redemption. Upon surrender to the Paying
Agent, such Securities shall be paid at the redemption price, plus accrued
interest to the redemption date.
Section 3.05. Deposit of Redemption Price.
On or before the redemption date, the Company shall deposit
with the Paying Agent immediately available funds sufficient to pay the
redemption price of and accrued interest on all Securities to be redeemed on
that date.
Section 3.06. Securities Redeemed in Part.
Upon surrender of a Security that is redeemed in part, the
Company and the Guarantors shall execute and the Trustee shall authenticate for
each Holder a new Security equal in principal amount to the unredeemed portion
of the Security surrendered.
ARTICLE FOUR
Covenants
Section 4.01. Payment of Securities.
The Company shall pay the principal of and interest on a
Series on the dates and in the manner provided in the Securities of the Series.
An installment of principal or interest shall be considered paid on the date it
is due if the Paying Agent holds on that date money designated for and
sufficient to pay the installment.
The Company shall pay interest on overdue principal at the
rate borne by the Series; it shall pay interest on overdue installments of
interest at the same rate.
Section 4.02. Maintenance of Office or Agency.
The Company shall maintain the office or agency required under
Section 2.03. The Company shall give prior written notice to the Trustee of the
location, and any change in the location, of such office or agency. If at any
time the Company shall fail to maintain any such required office or agency or
shall fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the address of the
Trustee.
Section 4.03. Compliance Certificate.
The Company shall deliver to the Trustee within 120 days after
the end of each fiscal year of the Company an Officers' Certificate stating
whether or not the signers know of any Default by the Company in performing any
of its obligations under this Indenture. If they do know of such a Default, the
certificate shall describe the Default.
Section 4.04. Payment of Taxes; Maintenance of Corporate
Existence; Maintenance of Properties.
The Company will:
(a) cause to be paid and discharged all lawful taxes,
assessments and governmental charges or levies imposed upon the Company and its
Restricted Subsidiaries or upon the income or profits of the Company and its
Restricted Subsidiaries or upon property or any part thereof belonging to the
Company and its Restricted Subsidiaries before the same shall be in default, as
well as all lawful claims for labor, materials and supplies which, if unpaid,
might become a lien or charge upon such property or any part thereof; provided,
however, that the Company shall not be required to cause to be paid or
discharged any such tax, assessment, charge, levy or claim so long as the
validity or amount thereof shall be contested in good faith by appropriate
proceedings and the nonpayment thereof does not, in the judgment of the Company,
materially adversely affect the ability of the Company and the Restricted
Subsidiaries to pay all obligations under the Indenture when due; and provided
further that the Company shall not be required to cause to be paid or discharged
any such tax, assessment, charge, levy or claim if, in the judgment of the
Company, such payment shall not be advantageous to the Company in the conduct of
its business and if the failure so to pay or discharge does not, in its
judgment, materially adversely affect the ability of the Company and the
Restricted Subsidiaries to pay all obligations under this Indenture when due;
(b) cause to be done all things necessary to preserve and keep
in full force and effect the corporate existence of the Company and each of its
Restricted Subsidiaries and to comply with all applicable laws; provided,
however, that nothing in this subsection (b) shall prevent a consolidation or
merger of the Company or any Restricted Subsidiary not prohibited by the
provisions of Article Five, Article Nine or any other provision or the
Authorizing Resolution or supplemental indenture pertaining to a Series, and the
Company need not maintain the corporate existence of an immaterial Restricted
Subsidiary which is not a Guarantor; and
(c) at all times keep, maintain and preserve all the property
of the Company and the Restricted Subsidiaries in good repair, working order and
condition (reasonable wear and tear excepted) and from time to time make all
needful and proper repairs, renewals, replacements, betterments and improvements
thereto, so that the business carried on in connection therewith may be properly
and advantageously conducted at all times; provided, however, that nothing in
this subsection (c) shall prevent the Company from discontinuing the operation
and maintenance of any such properties if such discontinuance is, in the
judgment of the Company, desirable in the conduct of its business and not
disadvantageous in any material respect to the ability of the Company and the
Restricted Subsidiaries to pay all obligations under this Indenture when due.
Section 4.05. Additional Guarantors.
If the Company or any of the Guarantors transfers or causes to
be transferred, in one transaction or a series of related transactions, any
property to any Restricted Subsidiary of the Company that is not a Guarantor, or
if the Company or any of the Guarantors shall organize, acquire or otherwise
invest in another Subsidiary which becomes a Restricted Subsidiary, then such
transferee or acquired or other Subsidiary shall (i) execute and deliver to the
Trustee a supplemental indenture in form reasonably satisfactory to the Trustee
pursuant to which such Subsidiary shall unconditionally guarantee all of the
Company's obligations under the Securities of any Series that has the benefit of
Guarantees of other Subsidiaries of the Company and this Indenture (as it
relates to all such Series) on the terms set forth in this Indenture and (ii)
deliver to the Trustee an Opinion of Counsel that such supplemental indenture
has been duly authorized, executed and delivered by such Subsidiary and
constitutes a legal, valid, binding and enforceable obligation of such
Subsidiary. Thereafter, such Subsidiary shall be a Guarantor for all purposes of
this Indenture (as it relates to all such Series).
Section 4.06. Limitation on Senior Subordinated Indebtedness.
(a) The Company shall not, directly or indirectly, incur any
Indebtedness that by its terms would expressly rank senior in right of payment
to the Securities of any Series and expressly rank subordinate in right of
payment to any Senior Indebtedness.
(b) The Company shall not permit any Guarantor to, and no
Guarantor shall, directly or indirectly, incur any Indebtedness that by its
terms would expressly rank senior in right of payment to the Guarantee of such
Guarantor of Securities of any Series and expressly rank subordinate in right of
payment to any Guarantor Senior Indebtedness of such Guarantor.
ARTICLE FIVE
Successor Corporation
Section 5.01. When Company May Merge, etc.
The Company shall not consolidate with or merge with or into,
any other corporation, or transfer all or substantially all of its assets to,
any entity unless permitted by law and unless (1) the resulting, surviving or
transferee entity, which shall be a corporation organized and existing under the
laws of the United States or a State thereof, assumes by supplemental indenture,
in a form reasonably satisfactory to the Trustee, all of the obligations of the
Company under the Securities and this Indenture and (2) immediately after giving
effect to, and as a result of, such transaction, no Default or Event of Default
shall have occurred and be continuing. Thereafter such successor corporation or
corporations shall succeed to and be substituted for the Company with the same
effect as if it had been named herein as the "Company" and all such obligations
of the predecessor corporation shall terminate.
The Company shall deliver to the Trustee prior to the
consummation of the proposed transaction an Officers' Certificate to the
foregoing effect and an Opinion of Counsel stating that the proposed transaction
and such supplemental indenture comply with this Indenture.
To the extent that an Authorizing Resolution or supplemental
indenture pertaining to any Series provides for different provisions relating to
the subject matter of this Article Five, the provisions in such Authorizing
Resolution or supplemental indenture shall govern for purposes of such Series.
ARTICLE SIX
Defaults and Remedies
Section 6.01. Events of Default.
An "Event of Default" on a Series occurs if, voluntarily or
involuntarily, whether by operation of law or otherwise, any of the following
occurs:
(1) the failure by the Company to pay interest on any
Security of such Series when the same becomes due and payable and the
continuance of any such failure for a pe riod of 30 days, whether or not such
payment is prohibited by Article Twelve or Article Thirteen hereof;
(2) the failure by the Company to pay the principal or
premium of any Security of such Series when the same becomes due and payable at
maturity, upon acceleration or otherwise, whether or not such payment is
prohibited by Article Twelve or Article Thirteen hereof;
(3) the failure by the Company or any Restricted Subsidiary
to comply with any of its agreements or covenants in, or provisions of, the
Securities of such Series, the Guarantees (as they relate thereto) or this
Indenture (as they relate thereto) and such failure continues for the period and
after the notice specified below (except in the case of a default with respect
to any Change of Control Provisions or Article Five (or any replacement
provisions as contemplated by Article Five), which will constitute Events of
Default with notice but without passage of time);
(4) the acceleration of any Indebtedness (other than
Non-Recourse Indebtedness) of the Company or any Restricted Subsidiary in an
amount of $20 million or more, individually or in the aggregate, and such
acceleration does not cease to exist, or such Indebtedness is not satisfied, in
either case within five days after such acceleration;
(5) the failure by the Company or any Restricted Subsidiary
to make any principal or interest payment in an amount of $20 million or more,
individually or in the aggregate, in respect of Indebtedness (other than
Non-Resource Indebtedness) of the Company or any Restricted Subsidiary within
five days of such principal or interest becoming due and payable (after giving
effect to any applicable grace period set forth in the documents governing such
Indebtedness);
(6) a final judgment or judgments in an amount of $20
million or more, individually or in the aggregate, for the payment of money
having been entered by a court or courts of competent jurisdiction against the
Company or any of its Restricted Subsidiaries and such judgment or judgments is
not satisfied, stayed, annulled or rescinded within 60 days of being entered;
(7) the Company or any Restricted Subsidiary that is a
Significant Subsidiary pursuant to or within the meaning of any Bankruptcy Law:
(A) commences a voluntary case,
(B) consents to the entry of an order for relief
against it in an involuntary case,
(C) consents to the appointment of a Custodian of it
or for all or substantially all of its property, or
(D) makes a general assignment for the benefit of its
creditors;
(8) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that:
(A) is for relief against the Company or any
Restricted Subsidiary that is a Significant Subsidiary as
debtor in an involuntary case,
(B) appoints a Custodian of the Company or any
Restricted Subsidiary that is a Significant Subsidiary or a
Custodian for all or substantially all of the property of
the Company or any Restricted Subsidiary that is a
Significant Subsidiary, or
(C) orders the liquidation of the Company or any
Restricted Subsidiary that is a Significant Subsidiary, and
the order or decree remains unstayed and in effect for 60
days; or
(9) any Guarantee of a Guarantor which is a Significant
Subsidiary ceases to be in full force and effect (other than in accordance with
the terms of such Guarantee and the Indenture) or is declared null and void and
unenforceable or found to be invalid or any Guarantor denies its liability under
its Guarantee (other than by reason of release of a Guarantor from its Guarantee
in accordance with the terms of the Indenture and the Guarantee).
A Default as described in sub-clause (3) above will not be
deemed an Event of Default until the Trustee notifies the Company, or the
Holders of at least 25 percent in principal amount of the then outstanding
Securities of the applicable Series notify the Company and the Trustee, of the
Default and (except in the case of a default with respect to any Change of
Control Provisions or Article Five (or any replacement provisions as
contemplated by Article Five)) the Company does not cure the Default within 60
days after receipt of the notice. The notice must specify the Default, demand
that it be remedied and state that the notice is a "Notice of Default." If such
a Default is cured within such time period, it ceases.
The term "Custodian" means any receiver, trustee, assignee,
liquidator, custodian or similar official under any Bankruptcy Law.
Section 6.02. Acceleration.
If an Event of Default (other than an Event of Default with
respect to the Company resulting from sub-clauses (7) or (8) above), shall have
occurred and be continuing under the Indenture, the Trustee by notice to the
Company, or the Holders of at least 25 percent in principal amount of the
Securities of the applicable Series then outstanding by notice to the Company
and the Trustee, may declare all Securities of such Series to be due and payable
immediately. Upon such declaration of acceleration, the amounts due and payable
on the Securities of such Series will be due and payable immediately. If an
Event of Default with respect to the Company specified in sub-clauses (7) or (8)
above occurs, all amounts due and payable on the Securities of such Series will
ipso facto become and be immediately due and payable without any declaration,
notice or other act on the part of the Trustee and the Company or any Holder.
The Holders of a majority in principal amount of the Securities of such Series
then outstanding by written notice to the Trustee and the Company may waive any
Default or Event of Default (other than any Default or Event of Default in
payment of principal or interest) with respect to such Series of Securities
under the Indenture. Holders of a majority in principal amount of the then
outstanding Securities of such Series may rescind an acceleration with respect
to such Series and its consequence (except an acceleration due to nonpayment of
principal or interest on the Securities of such Series) if the rescission would
not conflict with any judgment or decree and if all existing Events of Default
have been cured or waived.
No such rescission shall extend to or shall affect any
subsequent Event of Default, or shall impair any right or power consequent
thereon.
Section 6.03. Other Remedies.
If an Event of Default on a Series occurs and is continuing,
the Trustee may pursue any available remedy by proceeding at law or in equity to
collect the payment of principal of or interest on the Series or to enforce the
performance of any provision in the Securities or this Indenture applicable to
the Series.
The Trustee may maintain a proceeding even if it does not
possess any of the Securities or does not produce any of them in the proceeding.
A delay or omission by the Trustee or any Securityholder in exercising any right
or remedy accruing upon an Event of Default shall not impair the right or remedy
or constitute a waiver of or acquiescence in the Event of Default. No remedy is
exclusive of any other remedy. All available remedies are cumulative.
Section 6.04. Waiver of Existing Defaults.
Subject to Section 10.02, the Holders of a majority in
principal amount of the outstanding Securities of a Series on behalf of all the
Holders of the Series by notice to the Trustee may waive an existing Default on
such Series and its consequences. When a Default is waived, it is cured and
stops continuing, and any Event of Default arising therefrom shall be deemed to
have been cured; but no such waiver shall extend to any subsequent or other
Default or impair any right consequent thereon.
Section 6.05. Control by Majority.
The Holders of a majority in principal amount of the
outstanding Securities of a Series may direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or exercising
any trust or power conferred on it with respect to such Series. The Trustee,
however, may refuse to follow any direction (i) that conflicts with law or this
Indenture, (ii) that, subject to Section 7.01, the Trustee determines is unduly
prejudicial to the rights of other Securityholders, (iii) that would involve the
Trustee in personal liability or (iv) if the Trustee shall not have been
provided with indemnity satisfactory to it.
Section 6.06. Limitation on Suits.
A Securityholder of a Series may not pursue any remedy with
respect to this Indenture or the Series unless:
(1) the Holder gives to the Trustee written notice of a
continuing Event of Default on the Series;
(2) the Holders of at least a majority in principal amount
of the outstanding Securities of the Series make a written request to the
Trustee to pursue the remedy;
(3) such Holder or Holders offer to the Trustee indemnity
satisfactory to the Trustee against any loss, liability or expense;
(4) the Trustee does not comply with the request within 60
days after receipt of the request and the offer of indemnity; and
(5) no written request inconsistent with such written
request shall have been given to the Trustee pursuant to this Section 6.06.
A Securityholder may not use this Indenture to prejudice the
rights of another Securityholder or to obtain a preference or priority over
another Securityholder.
Section 6.07. Rights of Holders to Receive Payment.
Notwithstanding any other provision of this Indenture, the
right of any Holder to receive payment of principal of and interest on the
Security, on or after the respective due dates expressed in the Security, or to
bring suit for the enforcement of any such payment on or after such respective
dates, is absolute and unconditional and shall not be impaired or affected
without the consent of the Holder.
Section 6.08. Collection Suit by Trustee.
If an Event of Default in payment of interest or principal
specified in Section 6.01(1) or (2) occurs and is continuing, the Trustee may
recover judgment in its own name and as trustee of an express trust against the
Company for the whole amount of principal and interest remaining unpaid.
Section 6.09. Trustee May File Proofs of Claim.
The Trustee may file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses,
disbursements, and advances of the Trustee, its agents and counsel) and the
Securityholders allowed in any judicial proceedings relative to the Company, its
creditors or its property, and unless prohibited by applicable law or
regulation, may vote on behalf of the Holders in any election of a Custodian,
and shall be entitled and empowered to collect and receive any moneys or other
property payable or deliverable on any such claims and to distribute the same
and any Custodian in any such judicial proceeding is hereby authorized by each
Securityholder to make such payments to the Trustee. Nothing herein 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 or the rights of
any Holder or to authorize the Trustee to vote in respect of the claim of any
Securityholder except as aforesaid for the election of the Custodian.
Section 6.10. Priorities.
If the Trustee collects any money pursuant to this Article, it
shall pay out the money in the following order:
First: to the Trustee for amounts due under Section 7.07;
Second: to Securityholders of the Series for amounts due and
unpaid on the Series for principal and interest, ratably, without preference or
priority of any kind, according to the amounts due and payable on the Series for
principal and interest, respectively; and
Third: to the Company or the Guarantors as their interests may
appear.
The Trustee may fix a record date and payment date for any
payment to Securityholders pursuant to this Section 6.10.
Section 6.11. Undertaking for Costs.
In any suit for the enforcement of any right or remedy under
this Indenture or in any suit against the Trustee for any action taken or
omitted by it as Trustee, a court in its discretion may require the filing by
any party litigant in the suit of an undertaking to pay the costs of the suit,
and the court in its discretion may assess reasonable costs, including
reasonable attorneys' fees, against any party litigant in the suit, having the
due regard to the merits and good faith of the claims or defenses made by the
party litigant. This Section does not apply to a suit by the Trustee, a suit by
a Holder pursuant to Section 6.07 or a suit by Holders of more than 10% in
principal amount of the Series.
ARTICLE SEVEN
Trustee
Section 7.01. Duties of Trustee.
(a) If an Event of Default has occurred and is continuing, the
Trustee shall, prior to the receipt of directions from the Holders of a majority
in principal amount of the Securities, exercise its rights and powers and use
the same degree of care and skill in their exercise as a prudent man would
exercise or use under the circumstances in the conduct of his own affairs.
(b) Except during the continuance of an Event of Default:
(1) The Trustee need perform only those duties that are
specifically set forth in this Indenture and no others and no implied covenants
or obligations shall be read into this Indenture against the Trustee.
(2) In the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon certificates or opinions furnished to the
Trustee and conforming to the requirements of this Indenture. The Trustee,
however, shall examine the certificates and opinions to determine whether or not
they conform to the requirements of this Indenture but need not confirm or
investigate the accuracy of mathematical calculations or other facts or matters
stated therein.
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own willful
misconduct, except that:
(1) This paragraph does not limit the effect of paragraph (b)
of this Section.
(2) The Trustee shall not be liable for any error of judgment
made in good faith by a Trust Officer, unless it is proved that the Trustee was
negligent in ascertaining the pertinent facts.
(3) The Trustee shall not be liable with respect to any action
it takes or omits to take in good faith in accordance with a direction received
by it pursuant to Section 6.05 or any other direction of the Holders permitted
hereunder.
(d) Every provision of this Indenture that in any way relates
to the Trustee is subject to paragraphs (a), (b) and (c) of this Section.
(e) The Trustee may refuse to perform any duty or exercise any
right or power unless it receives indemnity satisfactory to it against any loss,
liability or expense.
(f) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree with the Company. Money held in
trust by the Trustee need not be segregated from other funds except to the
extent required by law.
(g) None of the provisions contained in this Indenture shall
require the Trustee to expend or risk its own funds or otherwise incur 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 grounds for believing that
the repayment of such funds or adequate indemnity against such liability is not
reasonably assured to it.
Section 7.02. Rights of Trustee.
Subject to Section 7.01:
(a) The Trustee may rely and shall be protected in acting or
refraining from acting on any document, resolution, certificate, instrument,
report, or direction believed by it to be genuine and to have been signed or
presented by the proper person. The Trustee need not investigate any fact or
matter stated in the document, resolution, certificate, instrument, report, or
direction.
(b) Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel or both, which shall
conform to Sections 11.04 and 11.05 hereof and containing such other statements
as the Trustee reasonably deems necessary to perform its duties hereunder. The
Trustee shall not be liable for any action it takes or omits to take in good
faith in reliance on the Officers' Certificate, Opinion of Counsel or any other
direction of the Company permitted hereunder.
(c) The Trustee may act through agents and shall not be
responsible for the misconduct or negligence of any agent appointed with due
care.
(d) The Trustee shall not be liable for any action taken,
suffered or omitted by it in good faith and believed by it to be authorized or
within the discretion or rights or powers conferred upon it by this Indenture.
(e) The Trustee may consult with counsel, and the written
advice of such counsel or any Opinion of Counsel as to matters of law shall be
full and complete authorization and protection in respect of any action taken,
omitted or suffered by it hereunder in good faith and in accordance with the
advice or opinion of such counsel.
(f) Unless otherwise specifically provided in the Indenture,
any demand, request, direction or notice from the Company shall be sufficient if
signed by an Officer of the Company.
(g) For all purposes under this Indenture, the Trustee shall
not be deemed to have notice or knowledge of any Event of Default (other than
under Section 6.01(1) or 6.01(2)) unless a Trust Officer assigned to and working
in the Trustee's corporate trust office has actual knowledge thereof or unless
written notice of any Event of Default is received by the Trustee at its address
specified in Section 11.02 hereof and such notice references the Securities
generally, the Company or this Indenture.
Section 7.03. Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become
the owner or pledgee of Securities and may otherwise deal with the Company or
its affiliates with the same rights it would have if it were not Trustee. Any
Agent may do the same with like rights. The Trustee, however, must comply with
Sections 7.10 and 7.11.
Section 7.04. Trustee's Disclaimer.
The Trustee makes no representation as to the validity or
adequacy of this Indenture, the Securities or of any prospectus used to sell the
Securities; it shall not be ac countable for the Company's use of the proceeds
from the Securities; it shall not be accountable for any money paid to the
Company, or upon the Company's direction, if made under and in accordance with
any provision of this Indenture; it shall not be responsible for the use or
application of any money received by any Paying Agent other than the Trustee;
and it shall not be responsible for any statement of the Company in this
Indenture or in the Securities other than its certificate of authentication.
Section 7.05. Notice of Defaults.
If a Default on a Series occurs and is continuing and if it is
known to the Trustee, the Trustee shall mail to each Securityholder of the
Series notice of the Default (which shall specify any uncured Default known to
it) within 90 days after it occurs. Except in the case of a default in payment
of principal of or interest on a Series, the Trustee may withhold the notice if
and so long as the board of directors of the Trustee, the executive or any trust
committee of such directors and/or responsible officers of the Trustee in good
faith determine(s) that withholding the notice is in the interests of Holders of
the Series.
Section 7.06. Reports by Trustee to Holders.
Within 60 days after each May 15 beginning with the May 15
following the date of this Indenture, the Trustee shall mail to each
Securityholder a brief report dated as of such May 15 that complies with TIA ss.
313(a) (but if no event described in TIA ss. 313(2) has occurred within the
twelve months preceding the reporting date no report need be transmitted). The
Trustee also shall comply with TIA ss. 313(b).
A copy of each report at the time of its mailing to
Securityholders shall be delivered to the Company and filed by the Trustee with
the SEC and each national securities exchange on which the Securities are
listed. The Company agrees to notify the Trustee of each national securities
exchange on which the Securities are listed.
Section 7.07. Compensation and Indemnity.
The Company shall pay to the Trustee or predecessor trustee
from time to time reasonable compensation for their respective services subject
to any written agreement between the Trustee and the Company. The Company shall
reimburse the Trustee upon request for all reasonable out-of-pocket expenses in
curred by it. Such expenses shall include the reasonable compensation and
expenses of the Trustee's agents and counsel. The Company shall indemnify the
Trustee and each predecessor trustee, its officers, directors, employees and
agents and hold it harmless against any loss, liability or expense incurred or
made by or on behalf of it in connection with the administration of this
Indenture or the trust hereunder and its duties hereunder including the costs
and expenses of defending itself against or investigating any claim in the
premises. The Trustee shall notify the Company promptly of any claim for which
it may seek indemnity. The Company need not reimburse any expense or indemnify
against any loss or liability incurred by the Trustee through the Trustee's, or
its officers', directors', employees' or agents' negligence or bad faith.
To ensure the Company's payment obligations in this Section,
the Trustee shall have a claim prior to the Securities on all money or property
held or collected by the Trustee, except that held in trust to pay principal of
or interest on particular Securities. When the Trustee incurs expenses or
renders services in connection with an Event of Default specified in Section
6.01 or in connection with Article 6 hereof, the expenses (including the
reasonable fees and expenses of its counsel) and the compensation for services
in connection therewith are to constitute expenses of administration under any
bankruptcy law.
Section 7.08. Replacement of Trustee.
The Trustee may resign by so notifying the Company. The
Holders of a majority in principal amount of the outstanding Securities may
remove the Trustee by so notifying the removed Trustee in writing and may
appoint a successor trustee with the Company's consent. Such resignation or
removal shall not take effect until the appointment by the Securityholders or
the Company as hereinafter provided of a successor trustee and the acceptance of
such appointment by such successor trustee. The Company may remove the Trustee
and any Securityholder may petition any court of competent jurisdiction for the
removal of the Trustee and the appointment of a successor trustee for any or no
reason, including if:
(1) the Trustee fails to comply with Section 7.10 after
written request by the Company or any bona fide Securityholder who has been a
Securityholder for at least six months;
(2) the Trustee is adjudged a bankrupt or an insolvent;
(3) a receiver or other public officer takes charge of the
Trustee or its property; or (4) the Trustee becomes
incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in
the office of Trustee for any reason, the Company shall promptly appoint a
successor trustee. If a successor trustee does not take office within 45 days
after the retiring Trustee resigns or is removed, the retiring Trustee, the
Company or any Holder may petition any court of competent jurisdiction for the
appointment of a successor trustee.
A successor trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Immediately after that,
the retiring Trustee shall transfer all property held by it as Trustee to the
successor trustee, the resignation or removal of the retiring Trustee shall
become effective, and the successor trustee shall have all the rights, powers
and duties of the Trustee under this Indenture. A successor trustee shall mail
notice of its succession to each Securityholder.
Section 7.09. Successor Trustee by Merger, etc.
If the Trustee consolidates with, merges with or into or
converts into, or transfers all or substantially all of its corporate trust
business to, another corporation, the successor corporation without any further
act shall be the successor trustee.
Section 7.10. Eligibility; Disqualification.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA ss. 310(a)(1). The Trustee shall have a combined capital and
surplus of at least $10,000,000 as set forth in its most recent published annual
report of condition. The Trustee shall comply with TIA ss. 310(b).
Section 7.11. Preferential Collection of Claims
Against Company.
The Trustee shall comply with TIA ss. 311(a), excluding any
creditor relationship listed in TIA ss. 311(b). A Trustee who has resigned or
been removed shall be subject to TIA ss. 311(a) to the extent indicated therein.
ARTICLE EIGHT
Discharge of Indenture
Section 8.01. Defeasance upon Deposit of Moneys or
U.S. Government Obligations.
(a) The Company may, at its option and, subject to the
provisions of Article Twelve and Article Thirteen hereof, at any time, elect to
have either paragraph (b) or paragraph (c) below be applied to the outstanding
Securities of any Series upon compliance with the applicable conditions set
forth in paragraph (d).
(b) Upon the Company's exercise under paragraph (a) of the
option applicable to this paragraph (b), the Company and the Guarantors shall be
deemed to have been released and discharged from their respective obligations
with respect to the outstanding Securities of a Series on the date the
applicable conditions set forth below are satisfied (hereinafter, "Legal
Defeasance"). For this purpose, such Legal Defeasance means that the Company
shall be deemed to have paid and discharged the entire Indebtedness represented
by the outstanding Securities of a Series, which shall thereafter be deemed to
be "outstanding" only for the purposes of the Sections and matters under this
Indenture referred to in (i) and (ii) below, and to have satisfied all its other
obligations under such Securities and this Indenture insofar as such Securities
are concerned, except for the following which shall survive until otherwise
terminated or discharged hereunder: (i) the rights of Holders of outstanding
Securities of a Series to receive solely from the trust fund described in
paragraph (d) below and as more fully set forth in such paragraph, payments in
respect of the principal of and interest on such Securities when such payments
are due and (ii) obligations listed in Section 8.02, subject to compliance with
this Section 8.01. The Company may exercise its option under this paragraph (b)
notwithstanding the prior exercise of its option under paragraph (c) below with
respect to such Securities.
(c) Upon the Company's exercise under paragraph (a) of the
option applicable to this paragraph (c), the Company and the Guarantors shall be
released and discharged from the obligations under any covenant contained in
Article Five, Section 4.05 and any other covenant contained in the Authorizing
Reso lution or supplemental indenture relating to such Series to the extent
provided for therein, on and after the date the conditions set forth below are
satisfied (hereinafter, "Covenant Defeasance"), and the Securities of such
Series shall thereafter be deemed to be not "outstanding" for the purpose of any
direction, waiver, consent or declaration or act of Holders (and the
consequences of any thereof) in connection with such covenants, but shall
continue to be deemed "outstanding" for all other purposes hereunder. For this
purpose, such Covenant Defeasance means that, with respect to the outstanding
Securities of a Series, the Company may omit to comply with and shall have no
liability in respect of any term, condition or limitation set forth in any such
covenant, whether directly or indirectly, by reason of any reference elsewhere
herein to any such covenant or by reason of any reference in any such covenant
to any other provision herein or in any other document and such omission to
comply shall not constitute a Default or an Event of Default under Section
6.01(3), but, except as specified above, the remainder of this Indenture and
such Securities shall be unaffected thereby.
(d) The following shall be the conditions to application of
either paragraph (b) or paragraph (c) above to the outstanding Securities of the
applicable Series:
(1) The Company shall have irrevocably deposited in trust
with the Trustee, pursuant to an irrevocable trust and security agreement in
form and substance reasonably satisfactory to the Trustee, money in U.S. dollars
or U.S. government obligations or a combination thereof in such amounts and at
such times as are sufficient, in the opinion of a nationally recognized firm of
independent public accountants, to pay the principal of and interest on the
outstanding Securities of such Series to maturity or redemption; provided,
however, that the Trustee (or other qualifying trustee) shall have received an
irrevocable written order from the Company instructing the Trustee (or other
qualifying trustee) to apply such money or the proceeds of such U.S. government
obligations to said payments with respect to the Securities of such Series to
maturity or redemption;
(2) No Default or Event of Default shall have occurred and
be continuing on the date of such deposit;
(3) Such deposit will not result in a Default under this
Indenture or a breach or violation of, or constitute a default under, any other
material instrument or agree ment to which the Company or any of any of their
Subsidiaries is a party or by which it or any of their property is bound;
(4) (i) In the event the Company elects paragraph (b)
hereof, the Company shall deliver to the Trustee an Opinion of Counsel in the
United States, in form and substance reasonably satisfactory to the Trustee, to
the effect that (A) the Company has received from, or there has been published
by, the Internal Revenue Service a ruling or (B) since the Issue Date pertaining
to such Series, there has been a change in the applicable federal income tax
law, in either case to the effect that, and based thereon such Opinion of
Counsel shall state that, or (ii) in the event the Company elects paragraph (c)
hereof, the Company shall deliver to the Trustee an Opinion of Counsel in the
United States, in form and substance reasonably satisfactory to the Trustee, to
the effect that, in the case of clauses (i) and (ii), 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 and the defeasance contemplated hereby and
will be subject to federal income tax in the same amounts and in the same manner
and at the same times as would have been the case if such deposit and defeasance
had not occurred;
(5) The Company shall have delivered to the Trustee an
Officers' Certificate, stating that the deposit under clause (1) was not made by
the Company with the intent of preferring the Holders of the Securities of such
Series over any other creditors of the Company or with the intent of defeating,
hindering, delaying or defrauding any other creditors of the Company or others;
(6) The Company shall have delivered to the Trustee an
Opinion of Counsel, reasonably satisfactory to the Trustee, to the effect that,
(A) the trust funds will not be subject to the rights of Holders of Indebtedness
of the Company other than the Securities of such Series and (B) assuming no
intervening bankruptcy of the Company between the date of deposit and the 91st
day following the deposit and that no Holder of Securities of such Series is an
insider of the Company, after the 91st day following the deposit, the trust
funds will not be subject to any applicable bankruptcy, insolvency,
reorganization or similar law affecting creditors' rights generally; and
(7) The Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent specified herein relating to the defeasance contemplated by this
Section 8.01 have been complied with.
In the event all or any portion of the Securities of a Series
are to be redeemed through such irrevocable trust, the Company must make
arrangements satisfactory to the Trustee, at the time of such deposit, for the
giving of the notice of such redemption or redemptions by the Trustee in the
name and at the expense of the Company.
(e) In addition to the Company's rights above under this
Section 8.01, the Company may terminate all of its obligations under this
Indenture with respect to a Series, and the obligations of the Guarantors shall
terminate with respect to such Series (subject to Section 8.02), when:
(1) All Securities of such Series theretofore authenticated
and delivered (other than Securities which have been destroyed, lost or stolen
and which have been replaced or paid as provided in Section 2.07 and Securities
for whose payment money has theretofore been deposited in trust or segregated
and held in trust by the Company and thereafter repaid to the Company or
discharged from such trust) have been delivered to the Trustee for cancellation
or all such Securities not theretofore delivered to the Trustee for cancellation
have become due and payable and the Company has irrevocably deposited or caused
to be deposited with the Trustee as trust funds in trust solely for that purpose
an amount of money sufficient to pay and discharge the entire Indebtedness on
the Securities not theretofore delivered to the Trustee for cancellation, for
principal of and interest;
(2) The Company has paid or caused to be paid all other sums
payable hereunder by the Company;
(3) The Company has delivered irrevocable instructions to
the Trustee to apply the deposited money toward the payment of the Securities at
maturity or redemption, as the case may be; and
(4) The Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, stating that all conditions precedent
specified herein relating to the satisfaction and discharge of this Indenture
have been complied with.
Section 8.02. Survival of the Company's Obligations.
Notwithstanding the satisfaction and discharge of the
Indenture under Section 8.01, the Company's obligations in paragraph 9 of the
Securities and Sections 2.03 through 2.07, 4.01, 7.07, 7.08, 8.04 and 8.05,
however, shall survive until the Securities of an applicable Series are no
longer outstanding. Thereafter, the Company's obligations in paragraph 9 of the
Securities of such Series and Sections 7.07, 8.04 and 8.05 shall survive (as
they relate to such Series).
Section 8.03. Application of Trust Money.
The Trustee shall hold in trust money or U.S. government
obligations deposited with it pursuant to Section 8.01. It shall apply the
deposited money and the money from U.S. government obligations in accordance
with this Indenture to the payment of principal of and interest on the
Securities of the defeased Series.
Section 8.04. Repayment to the Company.
The Trustee and the Paying Agent shall promptly pay to the
Company upon request any excess money or securities held by them at any time.
The Trustee and the Paying Agent shall pay to the Company upon request any money
held by them for the payment of principal or interest that remains unclaimed for
two years, provided, however, that the Trustee or such Paying Agent, before
being required to make any such repayment, may at the expense of the Company
cause to be published once in a newspaper of general circulation in the City of
New York or mail to each such Holder notice that such money remains unclaimed
and that, after a date specified therein, which shall not be less than 30 days
from the date of such publication or mailing, any unclaimed balance of such
money then remaining will be repaid to the Company. After payment to the
Company, Securityholders entitled to the money must look to the Company or any
Guarantor for payment as general creditors unless applicable abandoned property
law designates another person and all liability of the Trustee or such Paying
Agent with respect to such money shall cease.
Section 8.05. Reinstatement.
If the Trustee is unable to apply any money or U.S. government
obligations in accordance with Section 8.01 by reason of any legal proceeding or
by reason of any order or judgment of any court or governmental authority
enjoining, restraining or otherwise prohibiting such application, the Company's
and each Guarantor's obligations under this Indenture and the Securities
relating to the Series shall be revived and reinstated as though no deposit had
occurred pursuant to Section 8.01 until such time as the Trustee is permitted to
apply all such money or U.S. government obligations in accordance with Section
8.01; provided, however, that (a) if the Company has made any payment of
interest on or principal of any Securities of the Series because of the
reinstatement of their obligations, the Company shall be subrogated to the
rights of the Holders of such Securities to receive such payment from the money
or U.S. government obligations held by the Trustee and (b) unless otherwise
required by any legal proceeding or any order or judgment of any court or
governmental authority, the Trustee shall return all such money or U.S.
government obligations to the Company promptly after receiving a written request
therefor at any time, if such reinstatement of the Company's obligations has
occurred and continue to be in effect.
ARTICLE NINE
GUARANTEES
Section 9.01. Unconditional Guarantees.
Subject to any other provisions set forth in the Authorizing
Resolution or supplemental indenture relating to a particular Series, each
Guarantor hereby unconditionally, jointly and severally, guarantees (each such
guarantee to be referred to herein as the "Guarantee") to each Holder of
Securities of such Series authenticated and delivered by the Trustee and to the
Trustee and its successors and assigns, that: (i) the principal of and interest
on the Securities of such Series will be promptly paid in full when due, subject
to any applicable grace period, whether at maturity, by acceleration or
otherwise and interest on the overdue principal, if any, and interest on any
interest of the Securities of such Series and all other obligations of the
Company to the Holders or the Trustee hereunder or thereunder, except
obligations to pay principal and interest in any other Series not so guaranteed,
will be promptly paid in full or performed, all in accordance with the terms
hereof and thereof; and (ii) in case of any ex tension of time of payment or
renewal of any Securities of such Series or of any such other obligations, the
same will be promptly paid in full when due or performed in accordance with the
terms of the extension or renewal, subject to any applicable grace period,
whether at stated maturity, by acceleration or otherwise, subject, however, in
the case of clauses (i) and (ii) above, to the limitations set forth in Section
9.04. Each Guarantor hereby agrees that its obligations hereunder shall be
unconditional, irrespective of the validity, regularity or enforceability of the
Securities of such Series or this Indenture, the absence of any action to
enforce the same, any waiver or consent by any Holder of the Securities of such
Series with respect to any provisions hereof or thereof, the recovery of any
judgment against the Company, any action to enforce the same or any other
circumstance which might otherwise constitute a legal or equitable discharge or
defense of a guarantor. Each Guarantor hereby waives diligence, presentment,
demand of payment, filing of claims with a court in the event of insolvency or
bankruptcy of the Company, any right to require a proceeding first against the
Company, protest, notice and all demands whatsoever and covenants that, subject
to Section 9.03, this Guarantee will not be discharged except by complete
performance of the obligations contained in the Securities of the applicable
Series, this Indenture and in this Guarantee. If any Holder or the Trustee is
required by any court or otherwise to return to the Company, any Guarantor, or
any custodian, trustee, liquidator or other similar official acting in relation
to the Company or any Guarantor, any amount paid by the Company or any Guarantor
to the Trustee or such Holder, this Guarantee, to the extent theretofore
discharged, shall be reinstated in full force and effect. Each Guarantor further
agrees that, as between each Guarantor, on the one hand, and the Holders and the
Trustee, on the other hand, (x) the maturity of the obligations guaranteed
hereby may be accelerated as provided in Article Six for the purposes of this
Guarantee, notwithstanding any stay, injunction or other prohibition preventing
such acceleration in respect of the obligations guaranteed hereby, and (y) in
the event of any acceleration of such obligations as provided in Article Six,
such obligations (whether or not due and payable) shall forthwith become due and
payable by each Guarantor for the purpose of this Guarantee.
Section 9.02. Severability.
In case any provision of this Guarantee shall be invalid,
illegal or unenforceable, the validity, legality, and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
Section 9.03. Release of a Guarantor.
Upon the sale or disposition (whether by merger, stock
purchase, asset sale or otherwise) of a Guarantor (or all or substantially all
its assets) to an entity which is not a Restricted Subsidiary and which sale or
disposition is otherwise in compliance with the terms of this Indenture, or,
unless the Company elects otherwise, if any Guarantor is designated as an
Unrestricted Subsidiary in accordance with the terms of this Indenture, then
such Guarantor (in the event of a sale or other disposition of Capital Stock of
such Guarantor or a designation as an Unrestricted Subsidiary) or the Person
acquiring such assets (in the event of a sale or other disposition of all or
substantially all of the assets of such Guarantor) shall be deemed automatically
and unconditionally released and discharged from all obligations under this
Article Nine without any further action required on the part of the Trustee or
any Holder.
An Unrestricted Subsidiary that is a Guarantor shall be deemed
automatically and unconditionally released and discharged from all obligations
under this Article Nine upon notice from the Company to the Trustee to such
effect, without any further action required on the part of the Trustee or any
Holder.
The Trustee shall deliver an appropriate instrument evidencing
any such release upon receipt of a request by the Company accompanied by an
Officers' Certificate and Opinion of Counsel certifying as to the compliance
with this Section 9.03.
Any Guarantor not released in accordance with this Section
9.03 remains liable for the full amount of principal of and interest on the
Securities as provided in this Article Nine.
Section 9.04. Limitation of a Subsidiary Guarantor's Liability.
Each Guarantor and by its acceptance hereof each Holder hereby
confirms that it is the intention of all such parties that the guarantee by such
Guarantor pursuant to its Guarantee not constitute a fraudulent transfer or
conveyance for purposes of the Bankruptcy Law, the Uniform Fraudulent Conveyance
Act, the Uniform Fraudulent Transfer Act or any similar Federal or state law. To
effectuate the foregoing intention, the Holders and such Guarantor hereby
irrevocably agree that the obligations of such Guarantor under the Guarantee
shall be limited to the maximum amount as will, after giving effect to all other
contingent and fixed liabilities of such Guarantor and after giving effect to
any collections from or payments made by or on behalf of any other Guarantor in
respect of the obligations of such other Guarantor under its Guarantee or
pursuant to Section 9.06, result in the obligations of such Guarantor under the
Guarantee not constituting such fraudulent transfer or conveyance.
Section 9.05. Guarantors May Consolidate,
etc., on Certain Terms.
Nothing contained in this Indenture or in any of the
Securities shall prevent any consolidation or merger of a Guarantor with or into
the Company or another Restricted Guarantor, or shall prevent any sale of assets
or conveyance of the property of a Subsidiary Guarantor as an entirety or
substantially as an entirety to the Company or another Guarantor that is a
Restricted Subsidiary of the Company. Upon any such consolidation, merger, sale
or conveyance, the Guarantee given by such Guarantor shall no longer have any
force or effect.
Section 9.06. Contribution.
In order to provide for just and equitable contribution among
the Guarantors, the Guarantors agree, inter se, that in the event any payment or
distribution is made by any Guarantor (a "Funding Guarantor") under the
Guarantee, such Funding Guarantor shall be entitled to a contribution from all
other Guarantors in a pro rata amount based on the Adjusted Net Assets of each
Guarantor (including the Funding Guarantor) for all payments, damages and
expenses incurred by that Funding Guarantor in discharging the Company's
obligations with respect to any Securities or any other Guarantor's obligations
with respect to the Guarantee. "Adjusted Net Assets" of such Guarantor at any
date shall mean the lesser of the amount by which (x) the fair value of the
property of such Guarantor exceeds the total amount of liabilities, including,
without limitation, contingent liabilities (after giving effect to all other
fixed and contingent liabilities incurred or assumed on such date and after
giving effect to any collection from any other Subsidiary of the Guarantor in
respect of the obligations of its Guarantee), but excluding liabilities under
the Guarantee, of such Guarantor at such date and (y) the present fair salable
value of the assets of such Guarantor at such date exceeds the amount that will
be required to pay the probable liability of such Guarantor on its debts (after
giving effect to all other fixed and contingent liabilities incurred or assumed
on such date and after giving effect to any collection from any other Subsidiary
of the Company in respect of the obligations of such Guarantor under its
Guarantee), excluding debt in respect of the Guarantee of such Guarantor, as
they become absolute and matured.
Section 9.07. Waiver of Subrogation.
Until all guaranteed obligations under this Indenture and with
respect to all Securities of an applicable Series are paid in full, each
Guarantor hereby irrevocably waives any claim or other rights which it may now
or hereafter acquire against the Company that arise from the existence, payment,
performance or enforcement of such Guarantor's obligations under the Guarantee
and this Indenture, including, without limitation, any right of subrogation,
reimbursement, exoneration, indemnification, and any right to participate in any
claim or remedy of any Holder of Securities of the applicable Series against the
Company, whether or not such claim, remedy or right arises in equity, or under
contract, statute or common law, including, without limitation, the right to
take or receive from the Company, directly or indirectly, in cash or other
property or by set-off or in any other manner, payment or security on account of
such claim or other rights. If any amount shall be paid to any Guarantor in
violation of the preceding sentence and the Securities of the applicable Series
shall not have been paid in full, such amount shall have been deemed to have
been paid to such Guarantor for the benefit of, and held in trust for the
benefit of, the Holders of the Securities of the applicable Series, and shall
forthwith be paid to the Trustee for the benefit of such Holders to be credited
and applied upon the Securities of the applicable Series, whether matured or
unmatured, in accordance with the terms of this Indenture. Each Guarantor
acknowledges that it will receive direct and indirect benefits from the
financing arrangements contemplated by this Indenture and that the waiver set
forth in this Section 9.07 is knowingly made in contemplation of such benefits.
Section 9.08. Execution of Guarantee.
To evidence their guarantee to the Holders set forth in this
Article Nine, the Guarantors hereby agree to execute the Guarantee in
substantially the form included in Exhibit A or in any such other form set forth
in the Authorizing Resolution or supplemental indenture pertaining to the
applicable Series, which shall be endorsed on each Security ordered to be
authenticated and delivered by the Trustee. Each Guarantor hereby agrees that
its Guarantee set forth in this Article Nine shall remain in full force and
effect notwithstanding any fail ure to endorse on each Security a notation of
such Guarantee. Each such Guarantee shall be signed on behalf of each Guarantor
by two Officers, or an Officer and an Assistant Secretary or one Officer shall
sign and one Officer or an Assistant Secretary (each of whom shall, in each
case, have been duly authorized by all requisite corporate actions) shall attest
to such Guarantee prior to the authentication of the Security on which it is
endorsed, and the delivery of such Security by the Trustee, after the
authentication thereof hereunder, shall constitute due delivery of such
Guarantee on behalf of such Guarantor. Such signatures upon the Guarantee may be
by manual or facsimile signature of such officers and may be imprinted or
otherwise reproduced on the Guarantee, and in case any such officer who shall
have signed the Guarantee shall cease to be such officer before the Security on
which such Guarantee is endorsed shall have been authenticated and delivered by
the Trustee or disposed of by the Company, such Security nevertheless may be
authenticated and delivered or disposed of as though the person who signed the
Guarantee had not ceased to be such officer of the Guarantor.
ARTICLE TEN
Amendments, Supplements and Waivers
Section 10.01. Without Consent of Holders.
The Company, the Guarantors and the Trustee may amend or
supplement this Indenture or the Securities of a Series without notice to or
consent of any Securityholder of such Series:
(1) to cure any ambiguity, omission, defect or
inconsistency;
(2) to comply with Article Five;
(3) to provide that specific provisions of this Indenture
shall not apply to a Series not previously issued;
(4) to create a Series and establish its terms;
(5) to provide for uncertificated Securities in addition to
or in place of certificated Securities;
(6) to make any other change that does not adversely affect
the rights of Securityholders; and
(7) to remove a Guarantor in respect of any Series which, in
accordance with the terms of this Indenture applicable to the
particular Series, ceases to be liable in respect of its
Guarantee.
After an amendment under this Section 10.01 becomes effective,
the Company shall mail notice of such amendment to the Securityholders.
Section 10.02. With Consent of Holders.
The Company, the Guarantors and the Trustee may amend or
supplement this Indenture or the Securities of a Series without notice to any
Securityholder of such Series but with the written consent of the Holders of at
least a majority in principal amount of the outstanding Securities of each such
Series affected by the amendment. Each such Series shall vote as a separate
class. The Holders of a majority in principal amount of the outstanding
Securities of any Series may waive compliance by the Company with any provision
of the Securities of such Series or of this Indenture relating to such Series
without notice to any Securityholder. Without the consent of each Securityholder
of a Series affected, however, an amendment, supplement or waiver, including a
waiver pursuant to Section 6.04, may not:
(1) reduce the amount of Securities of such Series whose
Holders must consent to an amendment, supplement or waiver;
(2) reduce the rate of or change the time for payment of
interest, including defaulted interest, on any Security;
(3) reduce the principal of or change the fixed maturity of
any Security or alter the provisions (including related definitions) with
respect to redemption of Securities pursuant to Article Three hereof or with
respect to any obligations on the part of the Company to offer to purchase or to
redeem Securities of a Series pursuant to the Authorizing Resolution or
supplemental indenture pertaining to such Series;;
(4) modify the ranking or priority of the Securities of any
Series or the Guarantee thereof;
(5) release any Guarantor from any of its obligations under
its Guarantee or this Indenture otherwise than in accordance with the terms of
this Indenture;
(6) make any change in Sections 6.04, 6.07 or this 10.02;
(7) waive a continuing Default or Event of Default in the
payment of the principal of or interest on any Security; or
(8) make any Security payable at a place or in money other
than that stated in the Security, or impair the right of any Securityholder to
bring suit as permitted by Section 6.07.
An amendment of a provision included solely for the benefit of one or
more Series does not affect the interests of Securityholders of any other
Series.
It shall not be necessary for the consent of the Holders under this
Section to approve the particular form of any proposed supplement, but it shall
be sufficient if such consent approves the substance thereof.
Section 10.03. Compliance with Trust Indenture Act.
Every amendment to or supplement of this Indenture or the
Securities shall comply with the TIA as then in effect.
Section 10.04. Revocation and Effect of Consents.
A consent to an amendment, supplement or waiver by a Holder
shall bind the Holder and every subsequent Holder of a Security or portion of a
Security that evidences the same debt as the consenting Holder's Security, even
if notation of the consent is not made on any Security. Subject to the following
paragraph, any such Holder or subsequent Holder, however, may revoke the consent
as to his Security or portion of a Security. Such revocation shall be effective
only if the Trustee receives the notice of revocation before the date the
amendment, supplement or waiver becomes effective.
The Company may, but shall not be obligated to, fix a record
date for the purpose of determining the Holders of Securities of any Series
entitled to consent to any amendment, supplement or waiver, which record date
shall be at least 10 days prior to the first solicitation of such consent. If a
record date is fixed, then notwithstanding the last sentence of the immediately
preceding paragraph, those Persons who were Holders at such record date (or
their duly designated proxies), and only those Persons, shall be entitled to
revoke any consent previously given, whether or not such Persons continue to be
Holders after such record date. No such consent shall be valid or effective for
more than 90 days after such record date.
After an amendment, supplement or waiver becomes effective, it
shall bind every Holder, unless it makes a change described in any of clauses
(1) through (8) of Section 10.02, in which case, the amendment, supplement or
waiver shall bind only each Holder of a Security who has consented to it and
every subsequent Holder of a Security or portion of a Security that evidences
the same debt as the consenting Holder's Security; provided that any such waiver
shall not impair or affect the right of any Holder to receive payment of
principal of and interest on a Security, on or after the respective due dates
expressed in such Security, or to bring suit for the enforcement of any such
payment on or after such respective dates without the consent of such Holder.
Section 10.05. Notation on or Exchange of Securities.
If an amendment, supplement or waiver changes the terms of a
Security, the Company may require the Holder of the Security to deliver it to
the Trustee, at which time the Trustee shall place an appropriate notation on
the Security about the changed terms and return it to the Holder. Alternatively,
if the Company or the Trustee so determines, the Company in exchange for the
Security shall issue and the Trustee shall authenticate a new Security that
reflects the changed terms.
Section 10.06. Trustee to Sign Amendments, etc.
Subject to Section 7.02(b), the Trustee shall sign any
amendment, supplement or waiver authorized pursuant to this Article if the
amendment, supplement or waiver does not adversely affect the rights, duties,
liabilities or immunities of the Trustee. If it does, the Trustee may but need
not sign it. In signing or refusing to sign such amendment or supplemental
indenture, the Trustee shall be entitled to receive and shall be fully protected
in relying upon, an Officers' Certificate and an Opinion of Counsel as
conclusive evidence that such amendment or supplemental indenture is authorized
or permitted by this Indenture, that it is not inconsistent herewith, and that
it will be valid and binding upon the Company in accordance with its terms.
ARTICLE ELEVEN
Miscellaneous
Section 11.01. Trust Indenture Act Controls.
If any provision of this Indenture limits, qualifies or
conflicts with another provision which is required to be included in this
Indenture by the TIA, the required provision shall control.
Section 11.02. Notices.
Any order, consent, notice or communication shall be
sufficiently given if in writing and delivered in person or mailed by first
class mail, postage prepaid, addressed as follows:
if to the Company or to any Guarantor:
D.R. Horton, Inc.
1901 Ascension Blvd., Suite 100
Arlington, Texas 76006
Attention:
if to the Trustee:
Attention:
The Company or the Trustee by notice to the other may
designate additional or different addresses for subsequent notices or
communications.
Any notice or communication mailed to a Securityholder shall
be mailed to him by first class mail at his address as it appears on the
registration books of the Registrar and shall be sufficiently given to him if so
mailed within the time prescribed.
Failure to mail a notice or communication to a Securityholder
or any defect in it shall not affect its sufficiency with respect to other
Securityholders. If a notice or communi cation is mailed in the manner provided
above, it is duly given, whether or not the addressee receives it except that
notice to the Trustee shall only be effective upon receipt thereof by the
Trustee.
If the Company mails notice or communications to the
Securityholders, it shall mail a copy to the Trustee at the same time.
Section 11.03. Communications by Holders with
Other Holders.
Securityholders may communicate pursuant to TIA ss. 312(b)
with other Securityholders with respect to their rights under this Indenture or
the Securities. The Company, the Trustee, the Registrar and anyone else shall
have the protection of TIA ss. 312(c).
Section 11.04. Certificate and Opinion as to
Conditions Precedent.
Upon any request or application by the Company to the Trustee
to take any action under this Indenture, the Company shall furnish to the
Trustee:
(1) an Officers' Certificate (which shall include the
statements set forth in Section 11.05) stating that, in the opinion of the
signers, all conditions precedent, if any, provided for in this Indenture
relating to the proposed action have been complied with; and
(2) an Opinion of Counsel (which shall include the
statements set forth in Section 11.05) stating that, in the opinion of such
counsel, all such conditions precedent and covenants, compliance with which
constitutes a condition precedent, if any, provided for in this Indenture
relating to the proposed action or inaction, have been complied with and that
any such section does not conflict with the terms of the Indenture.
Section 11.05. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(1) a statement that the person making such certificate or
opinion has read such covenant or condition;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions contained in
such certificate or opinion are based;
(3) a statement that, in the opinion of such person, he has
made such examination or investigation as is necessary to enable him to express
an informed opinion as to whether or not such covenant or condition has been
complied with; and
(4) a statement as to whether or not, in the opinion of such
person, such condition or covenant has been complied with.
Section 11.06. Rules by Trustee and Agents.
The Trustee may make reasonable rules for action by or a
meeting of Securityholders. The Registrar or Paying Agent may make reasonable
rules for its functions.
Section 11.07. Legal Holidays.
A "Legal Holiday" is a Saturday, a Sunday, a legal holiday or
a day on which banking institutions in Fort Worth, Texas and New York, New York
are not required to be open. If a payment date is a Legal Holiday at a place of
payment, payment may be made at that place on the next succeeding day that is
not a Legal Holiday, and no interest shall accrue for the intervening period. A
Business Day is any day other than a Legal Holiday.
Section 11.08. Governing Law.
The laws of the State of New York shall govern this Indenture,
the Securities of each Series and the Guarantees.
Section 11.09. No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another indenture,
loan or debt agreement of the Company or a Subsidiary. Any such indenture, loan
or debt agreement may not be used to interpret this Indenture.
Section 11.10. No Recourse Against Others.
All liability described in paragraph 13 of the Securities of
any director, officer, employee or stockholder, as such, of the Company is
waived and released.
Section 11.11. Successors and Assigns.
All covenants and agreements of the Company in this Indenture
and the Securities shall bind its successors and assigns. All agreements of the
Trustee in this Indenture shall bind its successors and assigns.
Section 11.12. Duplicate Originals.
The parties may sign any number of copies of this Indenture.
Each signed copy shall be an original, but all of them together represent the
same agreement.
Section 11.13. Severability.
In case any one or more of the provisions contained in this
Indenture or in the Securities of a 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.
ARTICLE TWELVE
Subordination of Securities
Section 12.01. Securities Subordinated to Senior Indebtedness.
The Company covenants and agrees, and the Trustee and each
Holder of the Securities by his acceptance thereof likewise covenant and agree,
that all Securities shall be issued subject to the provisions of this Article
Twelve; and each person holding any Security, whether upon original issue or
upon transfer, assignment or exchange thereof, accepts and agrees that all
payments of the principal of and interest on the Securities by the Company
shall, to the extent and in the manner set forth in this Article Twelve, be
subordinated and junior in right of payment to the prior payment in full in cash
of all amounts payable under Senior Indebtedness.
Section 12.02. No Payment on Securities in Certain Circumstances.
(a) No direct or indirect payment (excluding any payment or
distribution of Permitted Junior Securities) by or on behalf of the Company of
principal of or interest on the Securities, except from those funds held in
trust for the benefit of Holders of any Securities pursuant to the procedures
set forth in Article Eight hereof, whether pursuant to the terms of the
Securities, upon acceleration or otherwise, shall be made if, at the time of
such payment, there exists a default in the payment of all or any portion of the
obligations on any Senior Indebtedness, whether at maturity, on account of
mandatory redemption or prepayment, acceleration or otherwise, and such default
shall not have been cured or waived or the benefits of this sentence waived by
or on behalf of the holders of such Senior Indebtedness. In addition, during the
continuance of any non-payment event of default with respect to any Designated
Senior Indebtedness pursuant to which the maturity thereof may be immediately
accelerated, and upon receipt by the Trustee of written notice (a "Payment
Blockage Notice" ) from the holder or holders of such Designated Senior
Indebtedness or the trustee or agent acting on behalf of such Designated Senior
Indebtedness, then, unless and until such event of default has been cured or
waived or has ceased to exist or such Designated Senior Indebtedness has been
discharged or repaid in full in cash or the benefits of these provisions have
been waived by the holders of such Designated Senior Indebtedness, no direct or
indirect payment (excluding any payment or distribution of Permitted Junior
Securities) shall be made by or on behalf of the Company of principal of or
interest on the Securities, except from those funds held in trust for the
benefit of Holders of any Securities pursuant to the procedures set forth in
Article Eight hereof, to such Holders, during a period (a "Payment Blockage
Period") commencing on the date of receipt of such notice by the Trustee and
ending 179 days thereafter.
Notwithstanding anything herein or in the Securities to the
contrary, (x) in no event shall a Payment Blockage Period extend beyond 179 days
from the date the Payment Blockage Notice in respect thereof was given, (y)
there shall be a period of at least 181 consecutive days in each 360-day period
when no Payment Blockage Period is in effect and (z) not more than one Payment
Blockage Period may be commenced with respect to the Securities during any
period of 360 consecutive days. No event of default that existed or was
continuing on the date of commencement of any Payment Blockage Period with
respect to the Designated Senior Indebtedness initiating such Payment Blockage
Period may be, or be made, the basis for the commencement of any other Payment
Blockage Period by the holder or holders of such Designated Senior Indebtedness
or the trustee or agent acting on behalf of such Designated Senior Indebtedness,
whether or not within a period of 360 consecutive days, unless such event of
default has been cured or waived for a period of not less than 90 consecutive
days.
(b) In the event that, notwithstanding the foregoing, any
payment shall be received by the Trustee or any Holder when such payment is
prohibited by Section 12.02(a), such payment shall be held in trust for the
benefit of, and shall be paid over or delivered to, the holders of Senior
Indebtedness (pro rata to such holders on the basis of the respective amounts of
Senior Indebtedness held by such holders) or their respective representatives,
or to the trustee or trustees under any indenture pursuant to which any of such
Senior Indebtedness may have been issued, as their respective interests may
appear, but only to the extent that, upon notice from the Trustee to the holders
of Senior Indebtedness that such prohibited payment has been made, the holders
of the Senior Indebtedness (or their representative or representatives or a
trustee) notify the Trustee in writing of the amounts then due and owing on the
Senior Indebtedness, if any, and only the amounts specified in such notice to
the Trustee shall be paid to the holders of Senior Indebtedness.
Section 12.03. Payment Over of Proceeds upon Dissolution, etc.
(a) Upon any payment or distribution of assets or securities
of the Company of any kind or character, whether in cash, property or securities
(excluding any payment or distribution of Permitted Junior Securities), upon any
dissolution or winding up or liquidation or reorganization of the Company,
whether voluntary or involuntary or in bankruptcy, insolvency, receivership or
other proceedings, all Senior Indebtedness shall first be paid in full in cash
before the Holders of the Securities or the Trustee on behalf of such Holders
shall be entitled to receive any payment by the Company of the principal of or
interest on the Securities, or any payment by the Company to acquire any of the
Securities for cash, property or securities, or any distribution with respect to
the Securities of any cash, property or securities (excluding any payment or
distribution of Permitted Junior Securities). Before any payment may be made by,
or on behalf of, the Company of the principal of or interest on the Securities
upon any such dissolution or winding up or liquidation or reorganization, any
payment or distribution of assets or securities of the Company of any kind or
character, whether in cash, property or securities (excluding any payment or
distribution of Permitted Junior Securities), to which the Holders of the
Securities or the Trustee on their behalf would be entitled, but for the
subordination provisions of this Indenture, shall be made by the Company or by
any receiver, trustee in bankruptcy, liquidation trustee, agent or other Person
making such payment or distribution, directly to the holders of the Senior
Indebtedness (pro rata to such holders on the basis of the respective amounts of
Senior Indebtedness held by such holders) or their representatives or to the
trustee or trustees or agent or agents under any agreement or indenture pursuant
to which any of such Senior Indebtedness may have been issued, as their
respective interests may appear, to the extent necessary to pay all such Senior
Indebtedness in full in cash after giving effect to any prior or concurrent
payment, distribution or provision therefor to or for the holders of such Senior
Indebtedness.
(b) In the event that, notwithstanding the foregoing provision
prohibiting such payment or distribution, any payment or distribution of assets
or securities of the Company of any kind or character, whether in cash, property
or securities (excluding any payment or distribution of Permitted Junior
Securities), shall be received by the Trustee or any Holder of Securities at a
time when such payment or distribution is prohibited by Section 12.03(a) and
before all obligations in respect of Senior Indebtedness are paid in full in
cash, or payment provided for, such payment or distribution shall be received
and held in trust for the benefit of, and shall be paid over or delivered to,
the holders of Senior Indebtedness (pro rata to such holders on the basis of the
respective amounts of Senior Indebtedness held by such holders) or their
respective representatives, or to the trustee or trustees or agent or agents
under any indenture pursuant to which any of such Senior Indebtedness may have
been issued, as their respective interests may appear, for application to the
payment of Senior Indebtedness remaining unpaid until all such Senior
Indebtedness has been paid in full in cash after giving effect to any prior or
concurrent payment, distribution or provision therefor to or for the holders of
such Senior Indebtedness.
The consolidation of the Company with, or the merger of the
Company with or into, another corporation or the liquidation or dissolution of
the Company following the conveyance or transfer of its property as an entirety,
or substantially as an entirety, to another corporation upon the terms and condi
tions provided in Article Five (or any replacement provisions as contemplated by
Article Five) shall not be deemed a dissolution, winding up, liquidation or
reorganization for the purposes of this Section 12.03 if such other corporation
shall, as a part of such consolidation, merger, conveyance or transfer, comply
with the conditions stated in Article Five (or any replacement provisions as
contemplated by Article Five).
Section 12.04. Subrogation.
Upon the payment in full of all Senior Indebtedness, or
provision for payment, the Holders of the Securities shall be subrogated to the
rights of the holders of Senior Indebtedness to receive payments or
distributions of cash, property or securities of the Company made on such Senior
Indebtedness until the principal of and interest on the Securities shall be paid
in full in cash; and, for the purposes of such subrogation, no payments or
distributions to the holders of the Senior Indebtedness of any cash, property or
securities to which the Holders of the Securities or the Trustee on their behalf
would be entitled except for the provisions of this Article Twelve, and no
payment over pursuant to the provisions of this Article Twelve to the holders of
Senior Indebtedness by Holders of the Securities or the Trustee on their behalf
shall, as between the Company, its creditors other than holders of Senior
Indebtedness, and the Holders of the Securities, be deemed to be a payment by
the Company to or on account of the Senior Indebtedness. It is understood that
the provisions of this Article Twelve are and are intended solely for the
purpose of defining the relative rights of the Holders of the Securities, on the
one hand, and the holders of the Senior Indebtedness, on the other hand.
If any payment or distribution to which the Holders of the
Securities would otherwise have been entitled but for the provisions of this
Article Twelve shall have been applied, pursuant to the provisions of this
Article Twelve, to the payment of all amounts payable under Senior Indebtedness,
then and in such case, the Holders of the Securities shall be entitled to
receive from the holders of such Senior Indebtedness any payments or
distributions received by such holders of Senior Indebtedness in excess of the
amount required to make payment in full, or provision for payment, of such
Senior Indebtedness.
Section 12.05. Obligations of Company Unconditional.
Nothing contained in this Article Twelve or elsewhere in this
Indenture or in the Securities is intended to or shall impair, as among the
Company and the Holders of the Securities, the obligation of the Company, which
is absolute and unconditional, to pay to the Holders of the Securities the
principal of and interest on the Securities as and when the same shall become
due and payable in accordance with their terms, or is intended to or shall
affect the relative rights of the Holders of the Securities and creditors of the
Company other than the holders of the Senior Indebtedness, nor shall anything
herein or therein prevent the Holder of any Security or the Trustee on their
behalf from exercising all remedies otherwise permitted by applicable law upon
default under this Indenture, subject to the rights, if any, under this Article
Twelve of the holders of the Senior Indebtedness in respect of cash, property or
securities of the Company received upon the exercise of any such remedy.
Without limiting the generality of the foregoing, nothing
contained in this Article Twelve shall restrict the right of the Trustee or the
Holders of Securities to take any action to declare the Securities to be due and
payable prior to their stated maturity pursuant to Section 6.01 or to pursue any
rights or remedies hereunder; provided, however, that all Senior Indebtedness
then due and payable shall first be paid in full before the Holders of the
Securities or the Trustee are entitled to receive any direct or indirect payment
from the Company of principal of or interest on the Securities.
Section 12.06. Notice to Trustee.
The Company shall give prompt written notice to the Trustee of
any fact known to the Company which would prohibit the making of any payment to
or by the Trustee in respect of the Securities pursuant to the provisions of
this Article Twelve. The Trustee shall not be charged with knowledge of the
existence of any event of default with respect to any Senior Indebtedness or of
any other facts which would prohibit the making of any payment to or by the
Trustee unless and until the Trustee shall have received notice in writing at
its corporate trust office to that effect signed by an Officer of the Company,
or by a holder of Senior Indebtedness or trustee or agent therefor; and prior to
the receipt of any such written notice, the Trustee shall, subject to Article
Seven, be entitled to assume that no such facts exist; provided that if the
Trustee shall not have received the notice provided for in this Section 12.06 at
least two Business Days prior to the date upon which by the terms of this
Indenture any moneys shall become payable for any purpose (including, without
limitation, the payment of the principal of or interest on any Security), then,
regardless of anything herein to the contrary, the Trustee shall have full power
and authority to receive any moneys from the Company and to apply the same to
the purpose for which they were received, and shall not be affected by any
notice to the contrary which may be received by it on or after such prior date.
Nothing contained in this Section 12.06 shall limit the right of the holders of
Senior Indebtedness to recover payments as contemplated by Section 12.03. The
Trustee shall be entitled to rely on the delivery to it of a written notice by a
Person representing himself or itself to be a holder of any Senior Indebtedness
(or a trustee on behalf of, or other representative of, such holder) to
establish that such notice has been given by a holder of such Senior
Indebtedness or a trustee or representative on behalf of any such holder.
In the event that the Trustee determines in good faith that
any evidence is required with respect to the right of any Person as a holder of
Senior Indebtedness to participate in any payment or distribution pursuant to
this Article Twelve, the Trustee may request such Person to furnish evidence to
the reasonable satisfaction of the Trustee as to the amount of Senior
Indebtedness held by such Person, the extent to which such Person is entitled to
participate in such payment or distribution and any other facts pertinent to the
rights of such Person under this Article Twelve, and if such evidence is not
furnished, the Trustee may defer any payment to such Person pending judicial
determination as to the right of such Person to receive such payment.
Section 12.07. Reliance on Judicial Order or Certificate
of Liquidating Agent.
Upon any payment or distribution of assets or securities
referred to in this Article Twelve, the Trustee and the Holders of the
Securities shall be entitled to rely upon any order or decree made by any court
of competent jurisdiction in which bankruptcy, dissolution, winding-up,
liquidation or reorganization proceedings are pending, or upon a certificate of
the receiver, trustee in bankruptcy, liquidating trustee, agent or other person
making such payment or distribution, delivered to the Trustee or to the Holders
of the Securities for the purpose of ascertaining the persons entitled to
participate in such distribution, the holders of the Senior Indebtedness and
other indebtedness of the Company, the amount thereof or payable thereon, the
amount or amounts paid or distributed thereon and all other facts pertinent
thereto or to this Article Twelve.
Section 12.08. Trustee's Relation to Senior Indebtedness.
The Trustee and any Paying Agent shall be entitled to all the
rights set forth in this Article Twelve with respect to any Senior Indebtedness
which may at any time be held by it in its individual or any other capacity to
the same extent as any other holder of Senior Indebtedness, and nothing in this
Indenture shall deprive the Trustee or any Paying Agent of any of its rights as
such holder.
With respect to the holders of Senior Indebtedness, the
Trustee undertakes to perform or to observe only such of its covenants and
obligations as are specifically set forth in this Article Twelve, and no implied
covenants or obligations with respect to the holders of Senior Indebtedness
shall be read into this Indenture against the Trustee. The Trustee shall not be
deemed to owe any fiduciary duty to the holders of Senior Indebtedness (except
as provided in Section 12.03(b)). The Trustee shall not be liable to any such
holders if the Trustee shall in good faith mistakenly pay over or distribute to
Holders of Securities or to the Company or to any other person cash, property or
securities to which any holders of Senior Indebtedness shall be entitled by
virtue of this Article Twelve or otherwise.
Section 12.09. Subordination Rights Not Impaired by Acts
or Omissions of the Company or Holders
of Senior Indebtedness.
No right of any present or future holders of any Senior
Indebtedness to enforce subordination as provided herein shall at any time in
any way be prejudiced or impaired by any act or failure to act on the part of
the Company or by any act or failure to act, in good faith, by any such holder,
or by any noncompliance by the Company with the terms of this Indenture,
regardless of any knowledge thereof which any such holder may have or otherwise
be charged with. The provisions of this Article Twelve are intended to be for
the benefit of, and shall be enforceable directly by, the holders of Senior
Indebtedness.
Section 12.10. Securityholders Authorize Trustee To
Effectuate Subordination of Securities.
Each Holder of Securities by his acceptance of such Securities
authorizes and expressly directs the Trustee on his behalf to take such action
as may be necessary or appropriate to effectuate the subordination provided in
this Article Twelve, and appoints the Trustee his attorney-in-fact for such
purposes, including, in the event of any dissolution, winding-up, liquidation or
reorganization of the Company (whether in bankruptcy, insolvency, receivership,
reorganization or similar proceedings or upon an assignment for the benefit of
creditors or otherwise) tending towards liquidation of the business and assets
of the Company, the filing of a claim for the unpaid balance of its or his
Securities in the form required in those proceedings.
Section 12.11. This Article Not to Prevent Events of Default.
The failure to make a payment on account of principal of or
interest on the Securities by reason of any provision of this Article Twelve
shall not be construed as preventing the occurrence of an Event of Default
specified in clause (1) or (2) of Section 6.01.
Section 12.12. Trustee's Compensation Not Prejudiced.
Nothing in this Article Twelve shall apply to amounts due to
the Trustee pursuant to other sections in this Indenture.
Section 12.13. No Waiver of Subordination Provisions.
Without in any way limiting the generality of Section 12.09,
the holders of Senior Indebtedness may, at any time and from time to time,
without the consent of or notice to the Trustee or the Holders of the
Securities, without incurring responsibility to the Holders of the Securities
and without impairing or releasing the subordination provided in this Article
Twelve or the obligations hereunder of the Holders of the Securities to the
holders of Senior Indebtedness, do any one or more of the following: a) change
the manner, place or terms of payment or extend the time of payment of, or renew
or alter, Senior Indebtedness or any instrument evidencing the same or any
agreement under which Senior Indebtedness is outstanding or secured; (b) sell,
exchange, release or otherwise deal with any property pledged, mortgaged or
otherwise securing Senior Indebtedness; (c) release any Person liable in any
manner for the collection of Senior Indebtedness; and (d) exercise or refrain
from exercising any rights against the Company and any other Person.
Section 12.14. Certain Payments May Be Paid Prior to Dissolution.
All money and United States government obligations properly
deposited in trust with the Trustee pursuant to and in accordance with Article
Eight shall be for the sole benefit of the Holders and shall not be subject to
this Article Twelve.
Nothing contained in this Article Twelve or elsewhere in this
Indenture shall prevent (i) the Company, except under the conditions described
in Section 12.02, from making payments of principal of and interest on the
Securities, or from depositing with the Trustee any moneys for such payments or
from effecting a termination of the Company's and the Guarantors' obligations
under the Securities and this Indenture as provided in Article Eight, or (ii)
the application by the Trustee of any moneys deposited with it for the purpose
of making such payments of principal of on and interest on the Securities to the
holders entitled thereto unless at least two Business Days prior to the date
upon which such payment becomes due and payable, the Trustee shall have received
the written notice provided for in Section 12.02(b) or in Section 12.06. The
Company shall give prompt written notice to the Trustee of any dissolution,
winding up, liquidation or reorganization of the Company.
ARTICLE THIRTEEN
Subordination of Guarantee
Section 13.01. Guarantee Obligations Subordinated to
Guarantor Senior Indebtedness.
Each Guarantor covenants and agrees, and the Trustee and each
Holder of the Securities by his acceptance thereof likewise covenant and agree,
that the Guarantee of such Guarantor shall be issued subject to the provisions
of this Article Thirteen; and each person holding any Security, whether upon
original issue or upon transfer, assignment or exchange thereof, accepts and
agrees that all payments of the principal of and interest on the Securities
pursuant to the Guarantee made by or on behalf of any Guarantor shall, to the
extent and in the manner set forth in this Article Thirteen, be subordinated and
junior in right of payment to the prior payment in full in cash of all amounts
payable under Guarantor Senior Indebtedness of such Guarantor.
Section 13.02. No Payment on Guarantees in Certain Circumstances.
(a) No direct or indirect payment (excluding any payment or
distribution of Permitted Junior Securities) by or on behalf of any Guarantor of
principal of or interest on the Securities, except from those funds held in
trust for the benefit of Holders of any Securities pursuant to the procedures
set forth in Article Eight hereof, pursuant to such Guarantor's Guarantee,
whether pursuant to the terms of the Securities, upon acceleration or otherwise,
shall be made if, at the time of such payment, there exists a default in the
payment of all or any portion of the obligations on any Guarantor Senior
Indebtedness of such Guarantor, whether at maturity, on account of mandatory
redemption or prepayment, acceleration or otherwise, and such default shall not
have been cured or waived or the benefits of this sentence waived by or on
behalf of the holders of such Guarantor Senior Indebtedness. In addition, during
the continuance of any non-payment event of default with respect to any
Designated Guarantor Senior Indebtedness pursuant to which the maturity thereof
may be immediately accelerated, and upon receipt by the Trustee of written
notice (the "Guarantor Payment Blockage Notice") from the holder or holders of
such Designated Guarantor Senior Indebtedness or the trustee or agent acting on
behalf of such Designated Guarantor Senior Indebtedness, then, unless and until
such event of default has been cured or waived or has ceased to exist or such
Designated Guarantor Senior Indebtedness has been discharged or paid in full in
cash or the benefits of these provisions have been waived by the holders of such
Designated Guarantor Senior Indebtedness, no direct or indirect payment
(excluding any payment or distribution of Permitted Junior Securities) shall be
made by or on behalf of such Guarantor of principal or interest on the
Securities, except from those funds held in trust for the benefit of the Holders
of any Securities pursuant to the procedures set forth in Article Eight hereof
to such Holders, during a period (a "Guarantor Blockage Period") commencing on
the date of receipt of such notice by the Trustee and ending 179 days
thereafter.
Notwithstanding anything herein or in the Securities to the
contrary, (x) in no event shall a Guarantor Blockage Period extend beyond 179
days from the date the Guarantor Payment Blockage Notice in respect thereof was
given, (y) there shall be a period of at least 181 consecutive days in each
360-day period when no Guarantor Blockage Period is in effect and (z) not more
than one Guarantor Blockage Period may be commenced with respect to any
Guarantor during any period of 360 consecu tive days. No event of default that
existed or was continuing on the date of commencement of any other Guarantor
Blockage Period with respect to the Designated Guarantor Senior Indebtedness
initiating such Guarantor Blockage Period may be, or be made, the basis for the
commencement of any other Guarantor Blockage Period by the holder or holders of
such Designated Guarantor Senior Indebtedness or the trustee or agent acting on
behalf of such Designated Guarantor Senior Indebtedness, whether or not within a
period of 360 consecutive days, unless such event of default has been cured or
waived for a period of not less than 90 consecutive days.
(b) In the event that, notwithstanding the foregoing, any
payment shall be received by the Trustee or any Holder when such payment is
prohibited by Section 13.02(a), such payment shall be held in trust for the
benefit of, and shall be paid over or delivered to, the holders of such
Guarantor Senior Indebtedness (pro rata to such holders on the basis of the
respective amounts of Senior Indebtedness held by such holders) or their
respective representatives, or to the trustee or trustees under any indenture
pursuant to which any of such Guarantor Senior Indebtedness may have been
issued, as their respective interests may appear, but only to the extent that,
upon notice from the Trustee to the holders of such Guarantor Senior
Indebtedness that such prohibited payment has been made, the holders of such
Guarantor Senior Indebtedness (or their representative or representatives or a
trustee) notify the Trustee in writing of the amounts then due and owing on such
Guarantor Senior Indebtedness, if any, and only the amounts specified in such
notice to the Trustee shall be paid to the holders of such Guarantor Senior
Indebtedness.
Section 13.03. Payment Over of Proceeds upon Dissolution, etc.
(a) Upon any payment or distribution of assets or securities
of any Guarantor of any kind or character, whether in cash, property or
securities (excluding any payment or distribution of Permitted Junior
Securities), upon any dissolution or winding-up or liquidation or reorganization
of such Guarantor, whether voluntary or involuntary or in bankruptcy,
insolvency, receivership or other proceedings, all Guarantor Senior Indebtedness
of such Guarantor shall first be paid in full before the Holders of the
Securities or the Trustee on behalf of such Holders shall be entitled to receive
any payment by such Guarantor of the principal of or interest on the Securities
pursuant to such Guarantor's Guarantee, or any payment to acquire any of the
Securities for cash, property or securities, or any distribution with respect to
the Securities of any cash, property or securities (excluding any payment or
distribution of Permitted Junior Securities). Before any payment may be made by,
or on behalf of, any Guarantor of the principal of or interest on the Securities
upon any such dissolution or winding-up or liquidation or reorganization, any
payment or distribution of assets or securities of such Guarantor of any kind or
character, whether in cash, property or securities (excluding any payment or
distribution of Permitted Junior Securities), to which the Holders of the
Securities or the Trustee on their behalf would be entitled, but for the
subordination provisions of this Indenture, shall be made by such Guarantor or
by any receiver, trustee in bankruptcy, liquidating trustee, agent or other
Person making such payment or distribution, directly to the holders of the
Guarantor Senior Indebtedness of such Guarantor (pro rata to such holders on the
basis of the respective amounts of such Guarantor Senior Indebtedness held by
such holders) or their representatives or to the trustee or trustees or agent or
agents under any agreement or indenture pursuant to which any of such Guarantor
Senior Indebtedness may have been issued, as their respective interests may
appear, to the extent necessary to pay all such Guarantor Senior Indebtedness in
full in cash after giving effect to any prior or concurrent payment,
distribution or provision therefor to or for the holders of such Guarantor
Senior Indebtedness.
(b) In the event that, notwithstanding the foregoing provision
prohibiting such payment or distribution, any payment or distribution of assets
or securities of any Guarantor of any kind or character, whether in cash,
property or securities (excluding any payment or distribution of Permitted
Junior Securities), shall be received by the Trustee or any Holder of Securities
at a time when such payment or distribution is prohibited by Section 13.03(a)
and before all obligations in respect of the Guarantor Senior Indebtedness of
such Guarantor are paid in full in cash, or payment provided for, such payment
or distribution shall be received and held in trust for the benefit of, and
shall be paid over or delivered to, the holders of such Guarantor Senior
Indebtedness (pro rata to such holders on the basis of the respective amounts of
such Guarantor Senior Indebtedness held by such holders) or their respective
representatives, or to the trustee or trustees or agent or agents under any
indenture pursuant to which any of such Guarantor Senior Indebtedness may have
been issued, as their respective interests may appear, for application to the
payment of such Guarantor Senior Indebtedness remaining unpaid until all such
Guarantor Senior Indebtedness has been paid in full in cash after giving effect
to any prior or concurrent payment, distribu tion or provision therefor to or
for the holders of such Guarantor Senior Indebtedness.
The consolidation of any Guarantor with, or the merger of any
Guarantor with or into, another corporation or the liquidation or dissolution of
any Guarantor following the conveyance or transfer of its property as an
entirety, or substantially as an entirety, to another corporation upon the terms
and conditions provided in Article Five (or any replacement provisions as
contemplated by Article Five) shall not be deemed a dissolution, winding-up,
liquidation or reorganization for the purposes of this Section 13.03 if such
other corporation shall, as a part of such consolidation, merger, conveyance or
transfer, comply with the conditions stated in Article Five (or any replacement
provisions as contemplated by Article Five).
Section 13.04. Subrogation.
Upon the payment in full of all Guarantor Senior Indebtedness
of a Guarantor, or provision for payment, the Holders of the Securities shall be
subrogated to the rights of the holders of such Guarantor Senior Indebtedness to
receive payments or distributions of cash, property or securities of such
Guarantor made on such Guarantor Senior Indebtedness until the principal of and
interest on the Securities shall be paid in full in cash; and, for the purposes
of such subrogation, no payments or distributions to the holders of such
Guarantor Senior Indebtedness of any cash, property or securities to which the
Holders of the Securities or the Trustee on their behalf would be entitled
except for the provisions of this Article Thirteen, and no payment over pursuant
to the provisions of this Article Thirteen to the holders of such Guarantor
Senior Indebtedness by Holders of the Securities or the Trustee on their behalf
shall, as between such Guarantor, its creditors other than holders of such
Guarantor Senior Indebtedness, and the Holders of the Securities, be deemed to
be a payment by such Guarantor to or on account of such Guarantor Senior
Indebtedness. It is understood that the provisions of this Article Thirteen are
and are intended solely for the purpose of defining the relative rights of the
Holders of the Securities, on the one hand, and the holders of Guarantor Senior
Indebtedness of each Guarantor, on the other hand.
If any payment or distribution to which the Holders of the
Securities would otherwise have been entitled but for the provisions of this
Article Thirteen shall have been applied, pursuant to the provisions of this
Article Thirteen, to the payment of all amounts payable under Guarantor Senior
Indebtedness, then and in such case, the Holders of the Securities shall be
entitled to receive from the holders of such Guarantor Senior Indebtedness any
payments or distributions received by such holders of Guarantor Senior
Indebtedness in excess of the amount required to make payment in full, or
provision for payment, of such Guarantor Senior Indebtedness.
Section 13.05. Obligations of Guarantors Unconditional.
Nothing contained in this Article Thirteen or elsewhere in
this Indenture or in the Securities or the Guarantees is intended to or shall
impair, as among the Guarantors and the Holders of the Securities, the
obligation of each Guarantor, which is absolute and unconditional, to pay to the
Holders of the Securities the principal of and interest on the Securities as and
when the same shall become due and payable in accordance with the terms of the
Guarantee of such Guarantor, or is intended to or shall affect the relative
rights of the Holders of the Securities and creditors of any Guarantor other
than the holders of Guarantor Senior Indebtedness of such Guarantor, nor shall
anything herein or therein prevent the Holder of any Security or the Trustee on
their behalf from exercising all remedies otherwise permitted by applicable law
upon default under this Indenture, subject to the rights, if any, under this
Article Thirteen of the holders of Guarantor Senior Indebtedness in respect of
cash, property or securities of any Guarantor received upon the exercise of any
such remedy.
Without limiting the generality of the foregoing, nothing
contained in this Article Thirteen shall restrict the right of the Trustee or
the Holders of Securities to take any action to declare the Securities to be due
and payable prior to their stated maturity pursuant to Section 6.01 or to pursue
any rights or remedies hereunder; provided, however, that all Guarantor Senior
Indebtedness of any Guarantor then due and payable shall first be paid in full
before the Holders of the Securities or the Trustee are entitled to receive any
direct or indirect payment from such Guarantor of principal of or interest on
the Securities pursuant to such Guarantor's Guarantee.
Section 13.06. Notice to Trustee.
The Company and each Guarantor shall give prompt written
notice to the Trustee of any fact known to the Company or such Guarantor which
would prohibit the making of any payment to or by the Trustee in respect of the
Securities pursuant to the provisions of this Article Thirteen. The Trustee
shall not be charged with knowledge of the existence of any event of default
with respect to any Guarantor Senior Indebtedness or of any other facts which
would prohibit the making of any payment to or by the Trustee unless and until
the Trustee shall have received notice in writing at its corporate trust office
to that effect signed by an Officer of the Company or such Guarantor, or by a
holder of Guarantor Senior Indebtedness or trustee or agent therefor; and prior
to the receipt of any such written notice, the Trustee shall, subject to Article
Seven, be entitled to assume that no such facts exist; provided that if the
Trustee shall not have received the notice provided for in this Section 13.06 at
least two Business Days prior to the date upon which by the terms of this
Indenture any moneys shall become payable for any purpose (including, without
limitation, the payment of the principal of or interest on any Security), then,
regardless of anything herein to the contrary, the Trustee shall have full power
and authority to receive any moneys from any Guarantor and to apply the same to
the purpose for which they were received, and shall not be affected by any
notice to the contrary which may be received by it on or after such prior date.
Nothing contained in this Section 13.06 shall limit the right of the holders of
Guarantor Senior Indebtedness to recover payments as contemplated by Section
13.03. The Trustee shall be entitled to rely on the delivery to it of a written
notice by a Person representing himself or itself to be a holder of any
Guarantor Senior Indebtedness (or a trustee on behalf of, or other
representative of, such holder) to establish that such notice has been given by
a holder of such Guarantor Senior Indebtedness or a trustee or representative on
behalf of any such holder.
In the event that the Trustee determines in good faith that
any evidence is required with respect to the right of any Person as a holder of
Guarantor Senior Indebtedness to participate in any payment or distribution
pursuant to this Article Thirteen, the Trustee may request such Person to
furnish evidence to the reasonable satisfaction of the Trustee as to the amount
of Guarantor Senior Indebtedness held by such Person, the extent to which such
Person is entitled to participate in such payment or distribution and any other
facts pertinent to the rights of such Person under this Article Thirteen, and if
such evidence is not furnished, the Trustee may defer any payment to such Person
pending judicial determination as to the right of such Person to receive such
payment.
Section 13.07. Reliance on Judicial Order or Certificate
of Liquidating Agent.
Upon any payment or distribution of assets or securities of a
Guarantor referred to in this Article Thirteen, the Trustee and the Holders of
the Securities shall be entitled to rely upon any order or decree made by any
court of competent jurisdiction in which bankruptcy, dissolution, winding-up,
liquidation or reorganization proceedings are pending, or upon a certificate of
the receiver, trustee in bankruptcy, liquidating trustee, agent or other person
making such payment or distribution, delivered to the Trustee or to the Holders
of the Securities for the purpose of ascertaining the persons entitled to
participate in such distribution, the holders of Guarantor Senior Indebtedness
of such Guarantor and other indebtedness of such Guarantor, the amount thereof
or payable thereon, the amount or amounts paid or distributed thereon and all
other facts pertinent thereto or to this Article Thirteen.
Section 13.08. Trustee's Relation to Guarantor Senior Indebtedness.
The Trustee and any Paying Agent shall be entitled to all the
rights set forth in this Article Thirteen with respect to any Guarantor Senior
Indebtedness which may at any time be held by it in its individual or any other
capacity to the same extent as any other holder of Guarantor Senior
Indebtedness, and nothing in this Indenture shall deprive the Trustee or any
Paying Agent of any of its rights as such holder.
With respect to the holders of Guarantor Senior Indebtedness,
the Trustee undertakes to perform or to observe only such of its covenants and
obligations as are specifically set forth in this Article Thirteen, and no
implied covenants or obligations with respect to the holders of Guarantor Senior
Indebtedness shall be read into this Indenture against the Trustee. The Trustee
shall not be deemed to owe any fiduciary duty to the holders of Guarantor Senior
Indebtedness (except as provided in Section 13.03(b)). The Trustee shall not be
liable to any such holders if the Trustee shall in good faith mistakenly pay
over or distribute to Holders of Securities or to the Company or to any other
person cash, property or securities to which any holders of Guarantor Senior
Indebtedness shall be entitled by virtue of this Article Thirteen or otherwise.
Section 13.09. Subordination Rights Not Impaired by Acts or
Omissions of the Guarantors or Holders
of Guarantor Senior Indebtedness.
No right of any present or future holders of any Guarantor
Senior Indebtedness to enforce subordination as provided herein shall at any
time in any way be prejudiced or impaired by any act or failure to act on the
part of any Guarantor or by any act or failure to act, in good faith, by any
such holder, or by any noncompliance by any Guarantor with the terms of this
Indenture, regardless of any knowledge thereof which any such holder may have or
otherwise be charged with. The provisions of this Article Thirteen are intended
to be for the benefit of, and shall be enforceable directly by, the holders of
Guarantor Senior Indebtedness.
Section 13.10. Securityholders Authorize Trustee
to Effectuate Subordination of Guarantee.
Each Holder of Securities by his acceptance of such Securities
authorizes and expressly directs the Trustee on his behalf to take such action
as may be necessary or appropriate to effectuate the subordination provided in
this Article Thirteen, and appoints the Trustee his attorney-in-fact for such
purposes, including, in the event of any dissolution, winding-up, liquidation or
reorganization of any Guarantor (whether in bankruptcy, insolvency,
receivership, reorganization or similar proceedings or upon an assignment for
the benefit of creditors or otherwise) tending towards liquidation of the
business and assets of such Guarantor, the filing of a claim for the unpaid
balance of its or his Securities in the form required in those proceedings.
Section 13.11. This Article Not to Prevent Events of Default.
The failure to make a payment on account of principal of or
interest on the Securities by reason of any provision of this Article Thirteen
shall not be construed as preventing the occurrence of an Event of Default
specified in clauses (1) or (2) of Section 6.01.
Section 13.12. Trustee's Compensation Not Prejudiced.
Nothing in this Article Thirteen shall apply to amounts due to
the Trustee pursuant to other Sections in this Indenture.
Section 13.13. No Waiver of Guarantee Subordination Provisions.
Without in any way limiting the generality of Section 13.09,
the holders of Guarantor Senior Indebtedness may, at any time and from time to
time, without the consent of or notice to the Trustee or the Holders of the
Securities, without incurring responsibility to the Holders of the Securities
and without impairing or releasing the subordination provided in this Article
Thirteen or the obligations hereunder of the Holders of the Securities to the
holders of Guarantor Senior Indebtedness, do any one or more of the following:
(a) change the manner, place or terms of payment or extend the time of payment
of, or renew or alter, Guarantor Senior Indebtedness or any instrument
evidencing the same or any agreement under which Guarantor Senior Indebtedness
is outstanding or secured; (b) sell, exchange, release or otherwise deal with
any property pledged, mortgaged or otherwise securing Guarantor Senior
Indebtedness; (c) release any Person liable in any manner for the collection of
Guarantor Senior Indebtedness; and (d) exercise or refrain from exercising any
rights against any Guarantor and any other Person.
Section 13.14. Certain Payments May Be Paid Prior to Dissolution.
Nothing contained in this Article Thirteen or elsewhere in
this Indenture shall prevent (i) a Guarantor, except under the conditions
described in Section 13.02, from making payments of principal of and interest on
the Securities, or from depositing with the Trustee any moneys for such
payments, or (ii) the application by the Trustee of any moneys deposited with it
for the purpose of making such payments of principal of and interest on the
Securities, to the holders entitled thereto unless at least two Business Days
prior to the date upon which such payment becomes due and payable, the Trustee
shall have received the written notice provided for in Section 13.02(b) or in
Section 13.06. A Guarantor shall give prompt written notice to the Trustee of
any dissolution, winding up, liquidation or reorganization of such Guarantor.
<PAGE>
SIGNATURES
IN WITNESS WHEREOF, the parties have caused this Indenture to
be duly executed, all as of the date first above written.
Dated: , 1997 D.R. HORTON, INC.
By:
Name:
Title:
Dated: , 1997 [List of Guarantors]
By:
Name:
Title:
Dated: , 1997 _______________, as Trustee
By:
Name:
Title:
(SEAL)
<PAGE>
EXHIBIT A
No. CUSIP No.: _______
[Title of Security]
D.R. HORTON, INC.
a Delaware corporation
promises to pay to
or registered assigns
the principal sum of [Dollars]1 on
[Title of Security]
Interest Payment, Dates: and
Record Dates: and
Authenticated: Dated:
D.R. Horton, Inc.
(Seal)
By__________________
Title:
By__________________
Title:
, as Trustee, certifies
that this is one of the Securities referred
to in the within mentioned Indenture.
By:________________________
Authorized Signatory
- --------
1 Or other currency. Insert corresponding provisions on reverse side of Security
in respect of foreign currency denomination or interest payment requirement.
<PAGE>
D.R. HORTON, INC.
[Title of Security]
1. Interest.
D.R. HORTON, INC. (the "Company"), a Delaware corporation,
promises to pay interest on the principal amount of this Security at the rate
per annum shown above. The Company will pay interest semiannually on
__________________ and ______________ of each year until the principal is paid
or made available for payment. Interest on the Securities will accrue from the
most recent date to which interest has been paid or duly provided for or, if no
interest has been paid, from _______________, 19 , provided that, if there is no
existing default in the payment of interest, and if this Security is
authenticated between a record date referred to on the face hereof and the next
succeeding interest payment date, interest shall accrue from such interest
payment date. Interest will be computed on the basis of a 360-day year of
twelve 30-day months.
2. Method of Payment. The Company will pay interest on the Securities (except
defaulted interest, if any, which will be paid on such special payment date to
Holders of record on such special record date as may be fixed by the Company) to
the persons who are registered Holders of Securities at the close of business on
the [Insert record dates]. Holders must surrender Securities to a Paying Agent
to collect principal payments. The Company will pay principal and interest in
money of the United States that at the time of payment is legal tender for
payment of public and private debts.
3. Paying Agent and Registrar.
Initially, _________________________ (the "Trustee") will act
as Paying Agent and Registrar. The Company may change or appoint any Paying
Agent, Registrar or co-Registrar without notice. The Company or any of its
Subsidiaries may act as Paying Agent, Registrar or co-Registrar.
4. Indenture.
The Company issued the Securities under an Indenture dated as
of ______________, 1997 ("Indenture") among the Com pany, the Guarantors and the
Trustee. The terms of the Securities and the Guarantees include those stated in
the Indenture (including those terms set forth in the Authorizing Resolution or
supplemental indenture pertaining to the Securities of the Series of which this
Security is a part) and those made part of the Indenture by reference to the
Trust Indenture Act of 1939 ("TIA") as in effect on the date of the Indenture.
The Securities and the Guarantees are subject to all such terms, and
Securityholders are referred to the Indenture and the Act for a statement of
them.
The Company will furnish to any Securityholder upon written
request and without charge a copy of the Indenture and the applicable
Authorizing Resolution or supplemental indenture. Requests may be made to: D.R.
Horton, Inc., 1901 Ascension Blvd., Suite 100, Arlington, Texas 76006,
Attention: ___________.
5. Optional Redemption.1
The Company may redeem the Securities at any time on or after
______________, ____, in whole or in part, at the following redemption prices
(expressed as a percentage of their principal amount) together with interest
accrued and unpaid to the date fixed for redemption:
If redeemed during the
Twelve-Month period
commencing on ___________ and
ending on ___________ in each
of the following years Percentage
- -------------------
1 If applicable
[Insert provisions relating to redemption at option of
Holders, if any]
Notice of redemption will be mailed at least 30 days but not
more than 60 days before the redemption date to each Holder of Securities to be
redeemed at his registered address. Securities in denominations larger than
$1,000 may be redeemed in part. On and after the redemption date interest ceases
to accrue on Securities or portions of them called for redemption, provided that
if the Company shall default in the payment of such Security at the redemption
price together with accrued interest, interest shall continue to accrue at the
rate borne by the Securities.
6. Mandatory Redemption.1
The Company shall redeem % of the aggregate principal
amount of Securities originally issued under the Indenture on each of , which
redemptions are calculated to retire % of the Securities originally issued prior
to maturity. Such redemptions shall be made at a redemption price equal to 100%
of the principal amount thereof, together with accrued interest to the
redemption date. The Company may reduce the principal amount of Securities to be
redeemed pursuant to this Paragraph 6 by the principal amount of any Securities
previously redeemed, retired or acquired, otherwise than pursuant to this
Paragraph 6, that the Company has delivered to the Trustee for cancellation and
not previously credited to the Company's obligations under this Paragraph 6.
Each such Security shall be received and credited for such purpose by the
Trustee at the redemption price and the amount of such mandatory redemption
payment shall be reduced accordingly.
7. Denominations, Transfer, Exchange.
The Securities are in registered form without coupons in
denominations of $1,000 and integral multiples of $1,000. A Holder may transfer
or exchange Securities by presentation of such Securities to the Registrar or a
co-Registrar with a request to register the transfer or to exchange them for an
- ----------------------
1 If applicable. Insert different or additional denomination and multiples.
equal principal amount of Securities of other denominations. The Registrar may
require a Holder, among other things, to furnish appropriate endorsements and
transfer documents and to pay any taxes and fees required by law or permitted by
the Indenture. The Registrar need not transfer or exchange any Security selected
for redemption, except the unredeemed part thereof if the Security is redeemed
in part, or transfer or exchange any Securities for a period of 15 days before a
selection of Securities to be redeemed.
8. Persons Deemed Owners.
The registered Holder of this Security shall be treated as the
owner of it for all purposes.
9. Unclaimed Money.
If money for the payment of principal or interest remains
unclaimed for two years, the Trustee or Paying Agent will pay the money back to
the Company at its request. After that, Holders entitled to the money must look
to the Company for payment unless an abandoned property law designates another
person.
10. Amendment, Supplement, Waiver.
Subject to certain exceptions, the Indenture or the Securities
may be amended or supplemented with the consent of the Holders of at least a
majority in principal amount of the outstanding Securities of each Series
affected by the amendment, and any past default or compliance with any provision
relating to any Series of the Securities may be waived in a particular instance
with the consent of the Holders of a majority in principal amount of the
outstanding Securities of such Series.1 Without the consent of any
Securityholder, the Company and the Trustee may amend or supplement the
Indenture or the Securities to cure any ambiguity, defect or inconsistency, to
provide for uncertificated Securities in addition to or in place of certificated
Securities, to create a Series and establish its terms, to remove a Guarantor in
respect of any Series which, in accordance with the terms of the Indenture,
- ---------------------
1 If different terms apply, insert a brief summary thereof.
ceases to be liable in respect of its Guarantee, or to make any other change,
provided such action does not adversely affect the rights of any Securityholder.
11. Successor Corporation.
When a successor corporation assumes all the obligations of
its predecessor under the Securities and the Indenture, the predecessor
corporation will be released from those obligations.
12. Trustee Dealings With Company.
________________________________, the Trustee under the
Indenture, in its individual or any other capacity, may make loans to, accept
deposits from, and perform services for the Company or its affiliates, and may
otherwise deal with the Company or its affiliates, as if it were not Trustee.
13. No Recourse Against Others.
A director, officer, employee or stockholder, as such, of the
Company shall not have any liability for any obligations of the Company under
the Securities or the Indenture or for any claim based on, in respect of or by
reason of, such obligations or their creation. Each Securityholder by accepting
a Security waives and releases all such liability. The waiver and release are
part of the consideration for the issue of the Securities.
- --------------------------------------------------------------------------------
14. Discharge of Indenture.
The Indenture contains certain provisions pertaining to
defeasance, which provisions shall for all purposes have the same effect as if
set forth herein.
15. Authentication.
This Security shall not be valid until the Trustee signs the
certificate of authentication on the other side of this Security.
16. Abbreviations.
Customary abbreviations may be used in the name of a
Securityholder or an assignee, such as: TEN COM (= tenants in common), TEN ENT
(= tenants by the entireties), JT TEN (= joint tenants with right of
survivorship and not as tenants in common), CUST (= custodian), and U/G/M/A (=
Uniform Gifts to Minors Act).
ASSIGNMENT FORM
If you the Holder want to assign this Security, fill in the
form below:
I or we assign and transfer this Security to
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Insert assignee's social security or tax ID number)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address, and zip code)
and irrevocably appoint
- --------------------------------------------------------------------------------
agent to transfer this Security on the books of the Company.
The agent may substitute another to act for him.
- --------------------------------------------------------------------------------
Date: ________________ Your signature:
(Sign exactly as your name appears
on the other side of this Security)
Signature Guarantee:___________________________
<PAGE>
[FORM OF NOTATION ON SECURITY RELATING TO GUARANTEE]
GUARANTEE
[List of Guarantors] (the "Guarantors") have unconditionally
guaranteed, jointly and severally (such guarantee by each Guarantor being
referred to herein as the "Guarantee") (i) the due and punctual payment of the
principal of and interest on the Securities, whether at maturity, by
acceleration or otherwise, the due and punctual payment of interest on the
overdue principal and interest, if any, on the Securities, to the extent lawful,
and the due and punctual performance of all other obligations of the Company to
the Holders or the Trustee all in accordance with the terms set forth in Article
Nine of the Indenture and (ii) in case of any extension of time of payment or
renewal of any Securities or any of such other obligations, that the same will
be promptly paid in full when due or performed in accordance with the terms of
the extension or renewal, whether at stated maturity, by acceleration or
otherwise.
No past, present or future stockholder, officer, director,
employee or incorporator, as such, of any of the Guarantors shall have any
liability under the Guarantee by reason of such person's status as stockholder,
officer, director, employee or incorporator. Each holder of a Security by
accepting a Security waives and releases all such liability. This waiver and
release are part of the consideration for the issuance of the Guarantees.
Each holder of a Security by accepting a Security agrees that
any Guarantor named below shall have no further liability with respect to its
Guarantee if such Guarantor otherwise ceases to be liable in respect of its
Guarantee in accordance with the terms of the Indenture.
<PAGE>
The Guarantee shall not be valid or obligatory for any
purpose until the certificate of authentication on the Securities upon which the
Guarantee is noted shall have been executed by the Trustee under the Indenture
by the manual signature of one of its authorized officers.
[List of Guarantors]
By:_____________________
Title:
EXHIBIT 4.1(c)
================================================================================
================================================================================
D.R. HORTON, INC. AND THE GUARANTORS NAMED HEREIN
Subordinated Debt Securities
----------------------
Indenture
Dated as of , 1997
----------------------
, Trustee
================================================================================
================================================================================
CROSS-REFERENCE TABLE
This Cross-Reference Table is not a part of the Indenture.
------------------------------------------
TIA Indenture
Section Section
- ------- -------
310(a)(1) 7.10
(a)(2) 7.10
(a)(3) N.A.
(a)(4) N.A.
(b) 7.08; 7.10; 11.02
311(a) 7.11
(b) 7.11
(c) N.A.
312(a) 2.05
(b) 11.03
(c) 11.03
313(a) 7.06
(b)(1) N.A.
(b)(2) 7.06
(c) 11.02
(d) 7.06
314(a) 4.02; 11.02
(b) N.A.
(c)(1) 11.04
(c)(2) 11.04
(c)(3) N.A.
(d) N.A.
(e) 11.05
315(a) 7.01(b)
(b) 7.05; 11.02
(c) 7.01(a)
(d) 7.01(c)
(e) 6.11
316(a)(last sentence) 11.06
(a)(1)(A) 6.05
(a)(1)(B) 6.04
(a)(2) N.A.
(b) 6.07
317(a)(1) 6.08
(a)(2) 6.09
(b) 2.04
318(a) 11.01
- ---------------------------
N.A. means Not Applicable.
<PAGE>
TABLE OF CONTENTS
This Table of Contents is not a part of the Indenture.
---------------------------
Page
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ARTICLE ONE
Definitions and Incorporation by Reference
Section 1.01 Definitions 1
Section 1.02 Other Definitions 13
Section 1.03 Incorporation by Reference of Trust Indenture Act 13
Section 1.04 Rules of Construction 13
ARTICLE TWO
The Securities
Section 2.01 Form and Dating 14
Section 2.02 Execution and Authentication 16
Section 2.03 Registrar and Paying Agent 16
Section 2.04 Paying Agent to Hold Money in Trust 17
Section 2.05 Securityholder Lists 17
Section 2.06 Transfer and Exchange 18
Section 2.07 Replacement Securities 18
Section 2.08 Outstanding Securities 19
Section 2.09 Temporary Securities 19
Section 2.10 Cancellation 19
Section 2.11 Defaulted Interest 20
Section 2.12 Treasury Securities 20
Section 2.13 CUSIP Numbers 20
Section 2.14 Deposit of Moneys 21
Section 2.15 Book-Entry Provisions for Global Security 21
ARTICLE THREE
Redemption
Section 3.01 Notices to Trustee 22
Section 3.02 Selection of Securities to be Redeemed 23
Section 3.03 Notice of Redemption 23
<PAGE>
Page
----
Section 3.04 Effect of Notice of Redemption 24
Section 3.05 Deposit of Redemption Price 24
Section 3.06 Securities Redeemed in Part 24
ARTICLE FOUR
Covenants
Section 4.01 Payment of Securities 25
Section 4.02 Maintenance of Office or Agency 25
Section 4.03 Compliance Certificate 25
Section 4.04 Payment of Taxes; Maintenance of
Corporate Existence; Maintenance of
Properties 25
Section 4.05 Additional Guarantors 27
ARTICLE FIVE
Successor Corporation
Section 5.01 When Company May Merge, etc. 28
ARTICLE SIX
Defaults and Remedies
Section 6.01 Events of Default 28
Section 6.02 Acceleration 31
Section 6.03 Other Remedies 32
Section 6.04 Waiver of Existing Defaults 32
Section 6.05 Control by Majority 32
Section 6.06 Limitation on Suits 32
Section 6.07 Rights of Holders to Receive Payment 33
Section 6.08 Collection Suit by Trustee 33
Section 6.09 Trustee May File Proofs of Claim 33
Section 6.10 Priorities 34
Section 6.11 Undertaking for Costs 34
<PAGE>
Page
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ARTICLE SEVEN
Trustee
Section 7.01 Duties of Trustee 35
Section 7.02 Rights of Trustee 36
Section 7.03 Individual Rights of Trustee 37
Section 7.04 Trustee's Disclaimer 37
Section 7.05 Notice of Defaults 38
Section 7.06 Reports by Trustee to Holders 38
Section 7.07 Compensation and Indemnity 38
Section 7.08 Replacement of Trustee 39
Section 7.09 Successor Trustee by Merger, etc. 40
Section 7.10 Eligibility; Disqualification 40
Section 7.11 Preferential Collection of Claims Against Company 40
ARTICLE EIGHT
Discharge of Indenture
Section 8.01 Defeasance up on Deposit of Moneys or U.S
Government Obligations 41
Section 8.02 Survival of the Company's Obligations 45
Section 8.03 Application of Trust Money 45
Section 8.04 Repayment to the Company 45
Section 8.05 Reinstatement 46
ARTICLE NINE
GUARANTEES
Section 9.01 Unconditional Guarantees 46
Section 9.02 Severability 47
Section 9.03 Release of a Guarantor 48
Section 9.04 Limitation of a Guarantor's Liability 48
Section 9.05 Guarantors May Consolidate, etc., on Certain Terms 49
Section 9.06 Contribution 49
Section 9.07 Waiver of Subrogation 50
Section 9.08 Execution of Guarantee 50
<PAGE>
Page
----
ARTICLE TEN
Amendments, Supplements and Waivers
Section 10.01 Without Consent of Holders 51
Section 10.02 With Consent of Holders 52
Section 10.03 Compliance with Trust Indenture Act 53
Section 10.04 Revocation and Effect of Consents 53
Section 10.05 Notation on or Exchange of Securities 54
Section 10.06 Trustee to Sign Amendments, etc. 54
ARTICLE ELEVEN
Miscellaneous
Section 11.01 Trust Indenture Act Controls 55
Section 11.02 Notices 55
Section 11.03 Communications by Holders with Other Holders 56
Section 11.04 Certificate and Opinion as to Conditions Precedent 56
Section 11.05 Statements Required in Certificate or Opinion 56
Section 11.06 Rules by Trustee and Agents 57
Section 11.07 Legal Holidays 57
Section 11.08 Governing Law 57
Section 11.09 No Adverse Interpretation of Other Agreements 57
Section 11.10 No Recourse Against Others 58
Section 11.11 Successors and Assigns 58
Section 11.12 Duplicate Originals 58
Section 11.13 Severability 58
ARTICLE TWELVE
Subordination of Securities
Section 12 01 Securities Subordinated to
Senior Indebtedness 58
Section 12.02 No Payment on Securities in Certain
Circumstances. 59
<PAGE>
Page
----
Section 12.03 Payment Over of Proceeds upon Dissolution, etc. 60
Section 12.04 Subrogation 62
Section 12.05 Obligations of Company Unconditional 62
Section 12.06 Notice to Trustee 63
Section 12.07 Reliance on Judicial Order or Certificate
of Liquidating Agent 64
Section 12.08 Trustee's Relation to Senior Indebtedness 65
Section 12.09 Subordination Rights Not Impaired by Acts
or Omissions of the Company or Holders of
Senior Indebtedness. 65
Section 12.10 Securityholders Authorize Trustee To
Effectuate Subordination of Securities. 65
Section 12.11 This Article Not to Prevent Events of Default 66
Section 12.12 Trustee's Compensation Not Prejudiced 66
Section 12.13 No Waiver of Subordination Provisions 66
Section 12.14 Certain Payments May Be Paid Prior to Dissolution 67
ARTICLE THIRTEEN
Subordination of Guarantee
Section 13.01 Guarantee Obligations Subordinated to
Guarantor Senior Indebtedness 67
Section 13.02 No Payment on Guarantees in Certain Circumstances. 68
Section 13.03 Payment Over of Proceeds upon Dissolution, etc. 69
SectioN 13.04 Subrogation 71
Section 13.05 Obligations of Guarantors Unconditional. 72
Section 13.06 Notice to Trustee 72
Section13.07 Reliance on Judicial Order or Certificate
of Liquidating Agent. 74
Section 13.08 Trustee's Relation to Guarantor Senior
Indebtedness 74
Section 13.09 Subordination Rights Not Impaired by Acts
or Omissions of the Guarantors or Holders of
Guarantor Senior Indebtedness 75
Section 13.10 Securityholders Authorize Trustee to Effectuate
Subordination of Guarantee 75
Section 13.11 This Article Not to Prevent Events of Default 75
Section 13.12 Trustee's Compensation Not Prejudiced 75
Section 13.13 No Waiver of Guarantee Subordination Provisions 76
<PAGE>
Page
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Section 13.14 Certain Payments May Be Paid Prior to
Dissolution. 76
Signatures 77
EXHIBIT A - Form of Security
<PAGE>
INDENTURE dated as of , 1997, by and among D.R. HORTON, INC.,
a Delaware corporation (the "Company"), each of the Guarantors (as defined in
Section 1.01 below) and , a (the "Trustee").
Each party agrees as follows for the benefit of the other
party and for the equal and ratable benefit of the Holders of the Company's debt
securities issued under this Indenture (the "Securities"):
ARTICLE ONE
Definitions and Incorporation by Reference
Section 1.01. Definitions.
"Affiliate" means, when used with reference to a specified
person, any Person directly or indirectly controlling or controlled by or under
direct or indirect common control with the Person specified.
"Agent" means any Registrar, Paying Agent or co-Registrar or
agent for service of notices and demands.
"Attributable Debt" means, with respect to any Capitalized
Lease Obligations, the capitalized amount thereof determined in accordance with
GAAP.
"Authorizing Resolution" means a resolution adopted by the
Board of Directors or by an Officer or committee of Officers pursuant to Board
delegation authorizing a Series of Securities.
"Bankruptcy Law" means title 11 of the United States Code, as
amended, or any similar federal or state law for the relief of debtors.
"Board of Directors" means the Board of Directors of the
Company or any authorized committee thereof.
"Capital Stock" means, with respect to any Person, any and all
shares, interests, participations or other equivalents (however designated) of
or in such Person's capital stock or other equity interests, and options, rights
or warrants to purchase such capital stock or other equity interests, whether
now outstanding or issued after the applicable Issue Date, including, without
limitation, all Disqualified Stock and Preferred Stock.
"Capitalized Lease Obligations" of any Person means the
obligations of such Person to pay rent or other amounts under a lease that is
required to be capitalized for financial reporting purposes in accordance with
GAAP, and the amount of such obligations will be the capitalized amount thereof
determined in accordance with GAAP.
"Change of Control Provisions" has the meaning set forth in
the definition of "Disqualified Stock" below.
"Company" means the party named as such in this Indenture
until a successor replaces it pursuant to the Indenture and thereafter means the
successor.
"Currency Agreement" of any Person means any foreign exchange
contract, currency swap agreement or other similar agreement or arrangement
designed to protect such Person or any of its Subsidiaries against fluctuations
in currency values.
"Default" means any event, act or condition that is, or after
notice or the passage of time or both would be, an Event of Default.
"Designated Guarantor Senior Indebtedness" means, with respect
to any Guarantor, any Guarantor Senior Indebtedness of such Guarantor which, at
the time of determination, has an aggregate principal amount outstanding of at
least $25.0 million if the instrument governing such Guarantor Senior
Indebtedness expressly states that such Indebtedness is "Guarantor Senior
Indebtedness" for purposes of this Indenture and a Board Resolution setting
forth such designation by the Company has been filed with the Trustee.
"Designated Senior Indebtedness" means any Senior Indebtedness
which, at the time of determination, has an aggregate principal amount
outstanding of at least $25.0 million if the instrument governing such Senior
Indebtedness expressly states that such Indebtedness is "Designated Senior
Indebtedness" for purposes of this Indenture and a Board Resolution setting
forth such designation by the Company has been filed with the Trustee.
"Disqualified Stock" means any Capital Stock that, by its
terms (or by the terms of any security into which it is convertible or for which
it is exchangeable), or upon the happening of any event, (i) matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or
is redeemable at the option of the holder thereof, in whole or in part, on or
prior to the final maturity date of the Securities of the applicable Series or
(ii) is convertible into or exchangeable or exercisable for (whether at the
option of the issuer or the holder thereof) (a) debt securities or (b) any
Capital Stock referred to in (i) above, in each case, at any time prior to the
final maturity date of the Securities of the applicable Series; provided,
however, that any Capital Stock that would not constitute Disqualified Stock but
for provisions thereof giving holders thereof (or the holders of any security
into or for which such Capital Stock is convertible, exchangeable or
exercisable) the right to require the Company to repurchase or redeem such
Capital Stock upon the occurrence of a change in control occurring prior to the
final maturity date of the Securities of the applicable Series shall not
constitute Disqualified Stock if the change in control provisions applicable to
such Capital Stock are no more favorable to such holders than any provisions
described in the Authorizing Resolution or supplemental indenture pertaining to
the Securities of the applicable Series ("Change of Control Provisions") and
such Capital Stock specifically provides that the Company will not repurchase or
redeem any such Capital Stock pursuant to such provisions prior to the Company's
repurchase of the Securities of the applicable Series to the extent required
pursuant to any such Change of Control Provisions.
"GAAP" means generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment of
the accounting profession of the United States, as in effect on the date of this
Indenture.
"Guarantee" means the guarantee of Securities of any
applicable Series by each Guarantor under this Indenture.
"Guarantor Senior Indebtedness" means, with respect to any
Guarantor, at any date, (a) all Indebtedness of such Guarantor for borrowed
money, including principal, premium, if any, and interest (including
Post-Petition Interest) on such Indebtedness, unless the instrument under which
such Indebtedness of such Guarantor for money borrowed is incurred expressly
provides that such Indebtedness for money borrowed is not senior or superior in
right of payment to such Guarantor's Guarantee of the Securities of the
applicable Series, and all renewals, extensions, modifications, amendments or
refinancings thereof; (b) all obligations of such Guarantor under Interest
Protection Agreements, and (c) all obligations of such Guaran tor under Currency
Agreements. Notwithstanding the foregoing, Guarantor Senior Indebtedness shall
not include (a) to the extent that it may constitute Indebtedness, any
obligation for federal, state, local or other taxes; (b) any Indebtedness
between such Guarantor and any Subsidiary of such Guarantor or any Unrestricted
Subsidiary of the Company; (c) to the extent that it may constitute
Indebtedness, any obligation in respect of any trade payable incurred for the
purchase of goods or materials, or for services obtained, in the ordinary course
of business; (d) that portion of any Indebtedness that is incurred in violation
of this Indenture; (e) Indebtedness evidenced by such Guarantor's Guarantee of
the Securities; (f) Indebtedness of such Guarantor that is expressly subordinate
or junior in right of payment to any other Indebtedness of such Guarantor; (g)
to the extent that it may constitute Indebtedness, any obligation owing under
leases (other than Capitalized Lease Obligations); and (h) any obligation that
by operation of law is subordinated to any general unsecured obligations of such
Guarantor.
"Guarantors" means (i) initially on the execution of this
Indenture, each of: D.R. Horton Management Company, Ltd., a Texas limited
partnership; DRHI, Inc., a Delaware corporation; D.R. Horton-Royalty, Ltd., a
Texas limited partnership; DRH Construction, Inc., a Delaware corporation; DRH
New Mexico Construction, Inc., a Delaware corporation; D.R. Horton Denver
Management Company, Inc., a Colorado corporation; D.R. Horton Denver No. 10,
Inc., a Colorado corporation; D.R. Horton Denver No. 11, Inc., a Colorado
corporation; D.R. Horton Denver No. 12, Inc., a Colorado corporation; D.R.
Horton Denver No. 13, Inc., a Colorado corporation; D.R. Horton Denver No. 14,
Inc., a Colorado corporation; D.R. Horton Denver No. 15, Inc., a Colorado
corporation; D.R. Horton Denver No. 16, Inc., a Colorado corporation; D.R.
Horton Denver No. 17, Inc., a Colorado corporation; D.R. Horton Denver No. 18,
Inc., a Colorado corporation; D.R. Horton, Inc., Albuquerque, a Delaware
corporation; D.R. Horton, Inc., Denver, a Delaware corporation; D.R. Horton,
Inc., Minnesota, a Delaware corporation; D.R. Horton, Inc., New Jersey, a New
Jersey corporation; Meadows I, Ltd., a Delaware corporation; Meadows II, Ltd., a
Delaware corporation; Meadows III, Ltd., a Delaware corporation; Meadows IX ,
Inc., a New Jersey corporation; Meadows X, Inc., a New Jersey corporation; SGS
Communities at Grande Quary, L.L.C., a New Jersey limited liability company;
D.R. Horton Los Angeles Holding Company, Inc., a California corporation; D.R.
Horton Los Angeles Management Company, Inc., a California corporation; D.R.
Horton Los Angeles No. 9, Inc., a California corporation; D.R. Horton Los
Angeles No. 10, Inc., a California corporation; D.R. Horton Los Angeles No. 11,
Inc., a California corporation; D.R. Horton Los Angeles No. 12, Inc., a
California corporation; D.R. Horton Los Angeles No. 13, Inc., a California
corporation; D.R. Horton Los Angeles No. 14, Inc., a California corporation;
D.R. Horton Los Angeles No. 16, Inc., a California corporation; D.R. Horton Los
Angeles No. 17, Inc., a California corporation; D.R. Horton, Inc. - Birmingham,
a Delaware corporation; D.R. Horton, Inc. - Greensboro, a Delaware corporation;
D.R. Horton San Diego Holding Company, Inc., a California corporation; D.R.
Horton San Diego Management Company, Inc., a California corporation; D.R. Horton
San Diego No. 9, Inc., a California corporation; D.R. Horton San Diego No. 10,
Inc., a California corporation; D.R. Horton San Diego No. 11, Inc., a California
corporation; D.R. Horton San Diego No. 12, Inc., a California corporation; D.R.
Horton San Diego No. 13, Inc., a California corporation; D.R. Horton San Diego
No. 14, Inc., a California corporation; D.R. Horton San Diego No. 15, Inc., a
California corporation; D.R. Horton San Diego No. 16, Inc., a California
corporation; D.R. Horton San Diego No. 17, Inc., a California corporation; D.R.
Horton San Diego No. 18, Inc., a California corporation; D.R. Horton San Diego
No. 19, Inc., a California corporation; D.R. Horton San Diego No. 20, Inc., a
California corporation; D.R. Horton San Diego No. 21, Inc., a California
corporation; D.R. Horton Texas, Ltd., a Texas limited partnership; D.R. Horton,
Inc. - Torrey, a Delaware corporation; and S.G. Torrey of Atlanta, Ltd., a
Georgia corporation; and (ii) each of the Company's Subsidiaries which becomes a
guarantor of Securities pursuant to the provisions of this Indenture. An
Unrestricted Subsidiary may become a Guarantor if it is so designated by
resolution of the Board of Directors of the Company.
"Holder" or "Securityholder" means the person in whose name a
Security is registered on the Registrar's books.
"Indebtedness" of any Person means, without duplication, (i)
any liability of such Person (a) for borrowed money or under any reimbursement
obligation relating to a letter of credit or other similar instruments (other
than standby letters of credit issued for the benefit of or surety, performance,
completion or payment bonds, earnest money notes or similar purpose undertakings
or indemnifications issued by, such Person in the ordinary course of business),
(b) evidenced by a bond, note, debenture or similar instrument (including a
purchase money obligation) given in connection with the acquisition of any
businesses, properties or assets of any kind or with services incurred in
connection with capital expenditures (other than any obligation to pay a
contingent purchase price which, as of the date of incurrence thereof is not
required to be re corded as a liability in accordance with GAAP), or (c) in
respect of Capitalized Lease Obligations (to the extent of the Attributable Debt
in respect thereof), (ii) any Indebtedness of others that such Person has
guaranteed to the extent of the guarantee, (iii) to the extent not otherwise
included, the obligations of such Person under Currency Agreements or Interest
Protection Agreements to the extent recorded as liabilities not constituting
Interest Incurred, net of amounts recorded as assets in respect of such
agreements, in accordance with GAAP, and (iv) all Indebtedness of others secured
by a Lien on any asset of such Person, whether or not such Indebtedness is
assumed by such Person; provided, that Indebtedness shall not include accounts
payable, liabilities to trade creditors of such Person or other accrued expenses
arising in the ordinary course of business. The amount of Indebtedness of any
Person at any date shall be (a) the outstanding balance at such date of all
unconditional obligations as described above, net of any unamortized discount to
be accounted for as Interest Expense, in accordance with GAAP, (b) the maximum
liability of such Person for any contingent obligations under clause (ii) above
at such date, net of, any unamortized discount to be accounted for as Interest
Expense in accordance with GAAP and (c) in the case of clause (iv) above, the
lesser of (1) the fair market value of any asset subject to a Lien securing the
Indebtedness of others on the date that the Lien attaches and (2) the amount of
the Indebtedness secured.
"Indenture" means this Indenture as amended or supplemented
from time to time, including pursuant to any Authorizing Resolution or
supplemental indenture pertaining to any Series.
"Insolvency or Liquidation Proceeding" means, with respect to
any Person, any liquidation, dissolution or winding up of such Person, or any
bankruptcy, reorganization, insolvency, receivership or similar proceeding with
respect to such Person, whether voluntary or involuntary.
"Interest Expense" of any Person for any period means, without
duplication, the aggregate amount of (i) interest which, in conformity with
GAAP, would be set opposite the caption "interest expense" or any like caption
on an income statement for such Person (including, without limitation, imputed
interest included in Capitalized Lease Obligations, all commissions, discounts
and other fees and charges owned with respect to letters of credit and bankers'
acceptance financing, the net costs (but reduced by net gains) associated with
Currency Agreements and Interest Protection Agreements, amortization of other
financing fees and expenses, the interest portion of any deferred payment
obligation, amortization of discount or premium, if any, and all other noncash
interest expense other than interest and other charges amortized to cost of
sales), and (ii) all interest actually paid by the Company or a Restricted
Subsidiary under any guarantee of Indebtedness (including, without limitation, a
guarantee of principal, interest or any combination thereof) of any Person other
than the Company or any Restricted Subsidiary during such period; provided, that
Interest Expense shall exclude any expense associated with the complete
write-off of financing fees and expenses in connection with the repayment of any
Indebtedness.
"Interest Protection Agreement" of any Person means any
interest rate swap agreement, interest rate collar agreement, option or futures
contract or other similar agreement or arrangement designed to protect such
Person or any of its Subsidiaries against fluctuations in interest rates with
respect to Indebtedness permitted to be incurred under this Indenture.
"Investments" of any Person means (i) all investments by such
Person in any other Person in the form of loans, advances or capital
contributions, (ii) all guarantees of Indebtedness or other obligations of any
other Person by such person, (iii) all purchases (or other acquisitions for
consideration) by such Person of Indebtedness, Capital Stock or other securities
of any other Person and (iv) all other items that would be classified as
investments in any other Person (including, without limitation, purchases of
assets outside the ordinary course of business) on a balance sheet of such
Person prepared in accordance with GAAP.
"Issue Date" means, with respect to any Series of Securities,
the date on which the Securities of such Series are originally issued under this
Indenture.
"Lien" means, with respect to any Property, any mortgage,
lien, pledge, charge, security interest or encumbrance of any kind in respect of
such Property. For purposes of this definition, a Person shall be deemed to own,
subject to a Lien, any Property which it has acquired or holds subject to the
interest of a vendor or lessor under any conditional sale agreement, capital
lease or other title retention agreement relating to such Property.
"Non-Recourse Indebtedness" with respect to any Person means
Indebtedness of such Person for which (i) the sole legal recourse for collection
of principal and interest on such Indebtedness is against the specific property
identified in the instruments evidencing or securing such Indebtedness and such
property was acquired with the proceeds of such Indebtedness or such
Indebtedness was incurred within 90 days after the acquisition of such property
and (ii) no other assets of such Person may be realized upon in collection of
principal or interest on such Indebtedness. Indebtedness which is otherwise
Non-Recourse Indebtedness will not lose its character as Non-Recourse
Indebtedness because there is recourse to the borrower, any guarantor or any
other Person for (i) environmental warranties and indemnities, or (ii)
indemnities for and liabilities arising from fraud, misrepresentation,
misapplication or non-payment of rents, profits, insurance and condemnation
proceeds and other sums actually received by the borrower from secured assets to
be paid to the lender, waste and mechanics' liens.
"Officer" means the Chairman of the Board, the President, any
Vice President, the Treasurer, the Controller or the Secretary of the Company.
"Officers' Certificate" means a certificate signed by two
Officers or by an Officer and an Assistant Treasurer or an Assistant Secretary
of the Company.
"Opinion of Counsel" means a written opinion from legal
counsel who is reasonably acceptable to the Trustee. The counsel may be an
employee of or counsel to the Company or the Trustee.
"Permitted Junior Securities" means any securities of the
Company or any other Person that are (i) equity securities or (ii) subordinated
in right of payment to all Senior Indebtedness or Guarantor Senior Indebtedness,
as the case may be, that may at the time be outstanding, to substantially the
same extent as, or to a greater extent than, the Securities are subordinated as
provided in this Indenture, in any event pursuant to a court order so providing
and as to which (a) the rate of interest on such securities shall not exceed the
effective rate of interest on the Securities on the date of this Indenture, (b)
such securities shall not be entitled to the benefits of covenants or defaults
materially more beneficial to the holders of such securities than those in
effect with respect to the Securities on the date of this Indenture and (c) such
securities shall not provide for amortization (including sinking fund and
mandatory prepayment provisions) commencing prior to the date six months
following the final scheduled maturity date of the Senior Indebtedness or
Guarantor Senior Indebtedness, as the case may be (as modified by the plan of
reorganization or readjustment pursuant to which such securities are issued).
"Person" means any individual, corporation, partnership,
limited liability company, joint venture, incorporated or unincorporated
association, joint stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Post-Petition Interest" means, with respect to any Senior
Indebtedness or Guarantor Senior Indebtedness of any Person, all interest
accrued or accruing on such Indebtedness after the commencement of any
Insolvency or Liquidation Proceeding against such Person in accordance with and
at the contract rate (including, without limitation, any rate applicable upon
default) specified in the agreement or instrument creating, evidencing or
governing such Indebtedness, whether or not, pursuant to applicable law or
otherwise, the claim for such interest is allowed as a claim in such Insolvency
or Liquidation Proceeding.
"Preferred Stock" of any Person means all Capital Stock of
such Person which has a preference in liquidation or with respect to the payment
of dividends.
"principal" of a debt security means the principal of the
security plus, when appropriate, the premium, if any, on the security.
"Property" of any Person means all types of real, personal,
tangible, intangible or mixed property owned by such Person, whether or not
included in the most recent consolidated balance sheet of such Person and its
Subsidiaries under GAAP.
"Restricted Subsidiary" means any Subsidiary of the Company
which is not an Unrestricted Subsidiary.
"SEC" means the Securities and Exchange Commission or any
successor agency performing the duties now assigned to it under the TIA.
"Securities" means any Securities that are issued under this
Indenture.
"Senior Indebtedness" means, at any date, (a) all Indebtedness
of the Company for borrowed money, including principal, premium, if any, and
interest (including Post-Petition Interest) on such Indebtedness, unless the
instrument under which such Indebtedness of the Company for money borrowed is
incurred expressly provides that such Indebtedness for money borrowed is not
senior or superior in right of payment to the Securities of the applicable
Series, and all renewals, extensions, modifications, amendments or refinancings
thereof; (b) all obligations of the Company under Interest Protection
Agreements, and (c) all obligations of the Company under Currency Agreements.
Notwithstanding the foregoing, Senior Indebtedness shall not include (a) to the
extent that it may constitute Indebtedness, any obligation for federal, state,
local or other taxes; (b) any Indebtedness between the Company and any
Subsidiary of the Company; (c) to the extent that it may constitute
Indebtedness, any obligation in respect of any trade payable incurred for the
purchase of goods or materials, or for services obtained, in the ordinary course
of business; (d) that portion of any Indebtedness that is incurred in violation
of this Indenture; (e) Indebtedness evidenced by the Securities; (f)
Indebtedness of the Company that is expressly subordinate or junior in right of
payment to any other Indebtedness of the Company; (g) to the extent that it may
constitute Indebtedness, any obligation owing under leases (other than
Capitalized Lease Obligations); and (h) any obligation that by operation of law
is subordinate to any general unsecured obligations of the Company.
"Series" means a series of Securities established under this
Indenture.
"Significant Subsidiary" means any Subsidiary of the Company
which would constitute a "significant subsidiary" as defined in Rule 1.02 of
Regulation S-X under the Securities Act and the Exchange Act.
"Subsidiary" of any Person means any corporation or other
entity of which a majority of the Capital Stock having ordinary voting power to
elect a majority of the Board of Directors or other persons performing similar
functions is at the time directly or indirectly owned or controlled by such
Person.
"TIA" means the Trust Indenture Act of 1939, as in effect from
time to time.
"Trustee" means the party named as such in this Indenture
until a successor replaces it pursuant to this Indenture and thereafter means
the successor serving hereunder.
"Trust Officer" means the Chairman of the Board, the
President, any Vice President or any other officer or assistant officer of the
Trustee assigned by the Trustee to administer its corporate trust matters.
"United States" means the United States of America.
"U.S. government obligations" means securities which are (i)
direct obligations of the United States for the payment of which its full faith
and credit is pledged or (ii) obligations of a person controlled or supervised
by and acting as an agency or instrumentality of the United States the payment
of which is unconditionally guaranteed as a full faith and credit obligation by
the United States, which, in either case are not callable or redeemable at the
option of the issuer thereof, and shall also include a depositary receipt issued
by a bank or trust company as custodian with respect to any such U.S. government
obligations or a specific payment of interest on or principal of any such U.S.
government obligation held by such custodian for the account of the holder of a
depositary receipt; provided that (except as required by law) such custodian is
not authorized to make any deduction from the amount payable to the holder of
such depositary receipt from any amount received by the custodian in respect of
the U.S. government obligation or the specific payment of interest on or
principal of the U.S. government obligation evidenced by such depositary
receipt.
"Unrestricted Subsidiary" means any Subsidiary of the Company
so designated by a resolution adopted by the Board of Directors of the Company
as provided below; provided that (a) the holders of Indebtedness thereof do not
have direct or indirect recourse against the Company or any Restricted
Subsidiary, and neither the Company nor any Restricted Subsidiary otherwise has
liability, for any payment obligations in respect of such Indebtedness
(including any undertaking, agreement or instrument evidencing such
Indebtedness), except, (i) in each case, to the extent that the amount thereof
constitutes a "restricted payment" permitted to be made under any provisions set
forth limiting the making or paying of a "restricted payment" under the
Authorizing Resolution or supplemental indenture pertaining to an applicable
Series ("Restricted Payment Provisions"), (ii) in the case of Non-Recourse
Indebtedness, to the extent such recourse or liability is for the matters
discussed in the last sentence of the definition of "Non-Recourse Indebtedness,"
or (iii) to the extent such Indebtedness is a guarantee by such Subsidiary of
Indebtedness of the Company or a Restricted Subsidiary and (b) no holder of any
Indebtedness of such Subsidiary shall have a right to declare a default on such
Indebtedness or cause the payment thereof to be accelerated or payable prior to
its stated maturity as a result of a default on any Indebtedness of the Company
or any Restricted Subsidiary. Subject to the foregoing, the Board of Directors
of the Company may designate any Subsidiary to be an Unrestricted Subsidiary;
provided, however, that (i) the net amount (the "Designation Amount") then
outstanding of all previous Investments by the Company and the Restricted
Subsidiaries in such Subsidiary will be deemed to be a "restricted payment"
pursuant to any Restricted Payment Provisions at the time of such designation
and will reduce the amount available for other restricted payments under any
Restricted Payment Provisions, to the extent provided therein, (ii) the Company
must be permitted under any Restricted Payment Provisions to make the
"restricted payment" deemed to have been made pursuant to clause (i), and (iii)
after giving effect to such designation, no Default or Event of Default shall
have occurred and be continuing. The Board of Directors of the Company may also
redesignate an Unrestricted Subsidiary to be a Restricted Subsidiary; provided,
however, that (i) the Indebtedness of such Unrestricted Subsidiary as of the
date of such redesignation could then be incurred under any provisions set forth
limiting the incurrence of Indebtedness under the Authorizing Resolution or
supplemental indenture pertaining to an applicable Series ("Debt Limitation
Provisions"), (ii) immediately after giving effect to such redesignation and the
incurrence of any such additional Indebtedness, the Company and the Restricted
Subsidiaries could incur $1.00 of additional Indebtedness under any debt
incurrence covenant ratio set forth in any Debt Limitation Provisions and (iii)
the Liens of such Unrestricted Subsidiary as of the date of such redesignation
could then be incurred in accordance with any provisions set forth limiting the
creation or existence of Liens under the Authorizing Resolution or supplemental
indenture pertaining to an applicable Series ("Lien Limitation Provisions"). Any
such designation or redesignation by the Board of Directors of the Company will
be evidenced to the Trustee by the filing with the Trustee of a certified copy
of the resolution of the Board of Directors of the Company giving effect to such
designation or redesignation and an Officers' Certificate certifying that such
designation or redesignation complied with the foregoing conditions and setting
forth the underlying calculations of such Officers' Certificate. The designation
of any Person as an Unrestricted Subsidiary shall be deemed to include a
designation of all Subsidiaries of such Person as Unrestricted Subsidiaries;
provided, however, that the ownership of the general partnership interest or a
similar member's interest in a limited liability company by an Unrestricted
Subsidiary shall not cause a Subsidiary of the Company of which more than 95% of
the equity interest is held by the Company or one or more Restricted
Subsidiaries to be deemed an Unrestricted Subsidiary.
Section 1.02. Other Definitions.
Term Defined in
- ---- ----------
"Agent Members".................................. 2.15
"Business Day"................................... 11.07
"Custodian"...................................... 6.01
"Depository"..................................... 2.15
"Event of Default"............................... 6.01
"Legal Holiday".................................. 11.07
"Paying Agent"................................... 2.03
"Registrar"...................................... 2.03
Section 1.03. Incorporation by Reference of Trust
Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in and made a part of this Indenture. The
following TIA terms used in this Indenture have the following meanings:
"Commission" means the SEC.
"indenture securities" means the Securities.
"indenture security holder" means a Securityholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the
Trustee.
"obligor" on the indenture securities means the Company, each
of the Guarantors, or any other obligor on the Securities of a Series or any
Guarantees thereof.
All other TIA terms used in this Indenture that are defined by
the TIA, defined by TIA reference to another statute or defined by SEC rule have
the meanings so assigned to them.
Section 1.04. Rules of Construction.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the
meaning assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the
plural include the singular; and
(5) provisions apply to successive events and trans-
actions.
ARTICLE TWO
The Securities
Section 2.01. Form and Dating.
The aggregate principal amount of Securities that may be
issued under this Indenture is unlimited. The Securities may be issued from time
to time in one or more Series. Each Series shall be created by an Authorizing
Resolution or a supplemental indenture that establishes the terms of the Series,
which may include the following:
(1) the title of the Series;
(2) the aggregate principal amount (or any limit on the
aggregate principal amount) of the Series and, if any Securities of a Series are
to be issued at a discount from their face amount, the method of computing the
accretion of such discount;
(3) the interest rate or method of calculation of the
interest rate;
(4) the date from which interest will accrue;
(5) the record dates for interest payable on Securities of
the Series;
(6) the dates when, places where and manner in which
principal and interest are payable;
(7) the Registrar and Paying Agent;
(8) the terms of any mandatory (including any sinking fund
requirements) or optional redemption by the Company;
(9) the terms of any redemption at the option of Holders;
(10) the denominations in which Securities are issuable;
(11) whether Securities will be issued in registered or
bearer form and the terms of any such forms of Securities;
(12) whether any Securities will be represented by a global
Security and the terms of any such global Security;
(13) the currency or currencies (including any composite
currency) in which principal or interest or both may be paid;
(14) if payments of principal or interest may be made in a
currency other than that in which Securities are denominated, the manner for
determining such payments;
(15) provisions for electronic issuance of Securities or
issuance of Securities in uncertificated form;
(16) any Events of Default, covenants and/or defined terms
in addition to or in lieu of those set forth in this Indenture;
(17) whether and upon what terms Securities may be defeased
if different from the provisions set forth in this Indenture;
(18) the form of the Securities, which, unless the
Authorizing Resolution or supplemental indenture otherwise provides, shall be in
the form of Exhibit A;
(19) any terms that may be required by or advisable under
applicable law;
(20) the percentage of the principal amount of the
Securities which is payable if the maturity of the Securities is accelerated in
the case of Securities issued at a discount from their face amount;
(21) whether any Securities will not have Guarantees; and
(22) any other terms in addition to or different from those
contained in this Indenture.
All Securities of one Series need not be issued at the same
time and, unless otherwise provided, a Series may be reopened for issuances of
additional Securities of such Series pursuant to an Authorizing Resolution, an
Officers' Certificate or in any indenture supplemental hereto.
The creation and issuance of a Series and the authentication
and delivery thereof are not subject to any conditions precedent.
Section 2.02. Execution and Authentication.
Two Officers shall sign the Securities for the Company by
manual or facsimile signature. The Company's seal shall be reproduced on the
Securities. Each Guarantor shall execute the Guarantee in the manner set forth
in Section 9.08.
If an Officer whose signature is on a Security no longer holds
that office at the time the Trustee authenticates the Security, the Security
shall nevertheless be valid.
A Security shall not be valid until the Trustee manually signs
the certificate of authentication on the Security. The signature shall be
conclusive evidence that the Security has been authenticated under this
Indenture.
The Trustee shall authenticate Securities for original issue
upon receipt of an Officers' Certificate of the Company. Each Security shall be
dated the date of its authentication.
Section 2.03. Registrar and Paying Agent.
The Company shall maintain an office or agency where
Securities may be presented for registration of transfer or for exchange
("Registrar"), an office or agency where Securities may be presented for payment
("Paying Agent") and an office or agency where notices and demands to or upon
the Company in respect of the Securities and this Indenture may be served. The
Registrar shall keep a register of the Securities and of their transfer and
exchange. The Company may have one or more co-Registrars and one or more
additional paying agents. The term "Paying Agent" includes any additional paying
agent.
The Company shall enter into an appropriate agency agreement
with any Agent not a party to this Indenture. The agreement shall implement the
provisions of this Indenture that relate to such Agent. The Company shall
promptly notify the Trustee in writing of the name and address of any such Agent
and the Trustee shall have the right to inspect the Securities register at all
reasonable times to obtain copies thereof, and the Trustee shall have the right
to rely upon such register as to the names and addresses of the Holders and the
principal amounts and certificate numbers thereof. If the Company fails to
maintain a Registrar or Paying Agent or fails to give the foregoing notice, the
Trustee shall act as such.
The Company initially appoints the Trustee as Registrar and
Paying Agent.
Section 2.04. Paying Agent to Hold Money in Trust.
Each Paying Agent shall hold in trust for the benefit of
Securityholders and the Trustee all money held by the Paying Agent for the
payment of principal of or interest on the Securities, and shall notify the
Trustee of any default by the Company in making any such payment. If the Company
or a Subsidiary acts as Paying Agent, it shall segregate the money and hold it
as a separate trust fund. The Company at any time may require a Paying Agent to
pay all money held by it to the Trustee. Upon doing so the Paying Agent shall
have no further liability for the money.
Section 2.05. Securityholder Lists.
The Trustee shall preserve in as current a form as is
reasonably practicable the most recent list available to it of the names and
addresses of Securityholders. If the Trustee is not the Registrar, the Company
shall furnish to the Trustee at least 7 Business Days before each semiannual
interest payment date and at such other times as the Trustee may request in
writing a list in such form and as of such date as the Trustee may reasonably
require of the names and addresses of Securityholders.
Section 2.06. Transfer and Exchange.
Where a Security is presented to the Registrar or a
co-Registrar with a request to register a transfer, the Registrar shall register
the transfer as requested if the requirements of Section 8-401(1) of the New
York Uniform Commercial Code are met. Where Securities are presented to the
Registrar or a co-Registrar with a request to exchange them for an equal
principal amount of Securities of other denominations, the Registrar shall make
the exchange as requested if the same requirements are met. To permit transfers
and exchanges, the Trustee shall authenticate Securities at the Registrar's
request. The Registrar need not transfer or exchange any Security selected for
redemption, except the unredeemed part thereof if the Security is redeemed in
part, or transfer or exchange any Securities for a period of 15 days before a
selection of Securities to be redeemed. Any exchange or transfer shall be
without charge, except that the Company may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in relation
thereto except in the case of exchanges pursuant to 2.09, 3.06, or 10.05 not
involving any transfer.
Any Holder of a global Security shall, by acceptance of such
global Security, agree that transfers of beneficial interests in such global
Security may be effected only through a book entry system maintained by the
Holder of such global Security (or its agent), and that ownership of a
beneficial interest in the Security shall be required to be reflected in a book
entry.
Section 2.07. Replacement Securities.
If the Holder of a Security claims that the Security has been
lost, destroyed, mutilated or wrongfully taken, the Company shall issue and,
upon written request of any Officer of the Company, the Trustee shall
authenticate a replacement Security, provided in the case of a lost, destroyed
or wrongfully taken Security, that the requirements of Section 8-405 of the New
York Uniform Commercial Code are met. If any such lost, destroyed, mutilated or
wrongfully taken Security shall have matured or shall be about to mature, the
Company may, instead of issuing a substitute Security therefor, pay such
Security without requiring (except in the case of a mutilated Security) the
surrender thereof. An indemnity bond must be sufficient in the judgment of the
Company and the Trustee to protect the Company, the Trustee or any Agent from
any loss which any of them may suffer if a Security is replaced, including the
acquisition of such Security by a bona fide purchaser. The Company or the
Trustee may charge for its expenses in replacing a Security.
Section 2.08. Outstanding Securities.
Securities outstanding at any time are all Securities
authenticated by the Trustee except for those cancelled by it and those
described in this Section. A Security does not cease to be outstanding because
the Company, any Guarantor or one of their Affiliates holds the Security.
If a Security is replaced pursuant to Section 2.07, it ceases
to be outstanding unless the Trustee receives proof satisfactory to it that the
replaced Security is held by a bona fide purchaser.
If the Paying Agent holds on a redemption date or maturity
date money sufficient to pay Securities payable on that date, then on and after
that date such Securities cease to be outstanding and interest on them ceases to
accrue.
Subject to the foregoing provisions of this Section, each
Security delivered under this Indenture upon registration of transfer of or in
exchange for or in lieu of any other Security shall carry the rights to interest
accrued and unpaid, and to accrue, which were carried by such other Security.
Section 2.09. Temporary Securities.
Until definitive Securities are ready for delivery, the
Company may prepare and the Trustee shall authenticate temporary Securities.
Temporary Securities shall be substantially in the form of definitive Securities
but may have variations that the Company considers appropriate for temporary
Securities. Without unreasonable delay, the Company shall prepare and, upon
surrender for cancellation of the temporary Security, the Company and the
Guarantors shall execute and the Trustee shall authenticate definitive
Securities in exchange for temporary Securities. Until so exchanged, the
temporary Securities shall in all respects be entitled to the same benefits
under this Indenture as definitive Securities authenticated and delivered
hereunder.
Section 2.10. Cancellation.
The Company at any time may deliver Securities to the Trustee
for cancellation. The Registrar and Paying Agent shall forward to the Trustee
any Securities surrendered to them for registration of transfer, exchange,
redemption or payment. The Trustee and no one else shall cancel and destroy, or
retain in accordance with its standard retention policy, all Securities
surrendered for registration or transfer, exchange, redemption, paying or
cancellation. Unless the Authorizing Resolution so provides, the Company may not
issue new Securities to replace Securities that it has previously paid or
delivered to the Trustee for cancellation.
Section 2.11. Defaulted Interest.
If the Company defaults in a payment of interest on the
Securities, it shall pay the defaulted interest plus any interest payable on the
defaulted interest to the persons who are Securityholders on a subsequent
special record date. The Company shall fix such special record date and a
payment date which shall be reasonably satisfactory to the Trustee. At least 15
days before such special record date, the Company shall mail to each
Securityholder a notice that states the record date, the payment date and the
amount of defaulted interest to be paid. On or before the date such notice is
mailed, the Company shall deposit with the Paying Agent money sufficient to pay
the amount of defaulted interest to be so paid. The Company may pay defaulted
interest in any other lawful manner if, after notice given by the Company to the
Trustee of the proposed payment, such manner of payment shall be deemed
practicable by the Trustee.
Section 2.12. Treasury Securities.
In determining whether the Holders of the required principal
amount of Securities of a Series have concurred in any direction, waiver,
consent or notice, Securities owned by the Company, the Guarantors or any of
their respective Affiliates shall be considered as though they are not
outstanding, except that for the purposes of determining whether the Trustee
shall be protected in relying on any such direction, waiver or consent, only
Securities which the Trustee actually knows are so owned shall be so considered.
Section 2.13. CUSIP Numbers.
The Company in issuing the Securities of any Series may use a
"CUSIP" number, and if so, the Trustee shall use the CUSIP number in notices of
redemption or exchange as a convenience to Holders of such Securities; provided
that no representation is hereby deemed to be made by the Trustee as to the
correctness or accuracy of any such CUSIP number printed in the notice or on
such Securities, and that reliance may be placed only on the other
identification numbers printed on such Securities. The Company shall promptly
notify the Trustee of any change in any CUSIP number.
Section 2.14. Deposit of Moneys.
Prior to 11:00 a.m. New York City time on each interest
payment date and maturity date with respect to each Series of Securities, the
Company shall have deposited with the Paying Agent in immediately available
funds money sufficient to make cash payments due on such interest payment date
or maturity date, as the case may be, in a timely manner which permits the
Paying Agent to remit payment to the Holders on such interest payment date or
maturity date, as the case may be.
Section 2.15. Book-Entry Provisions for Global
Security.
(a) Any global Security of a Series initially shall (i) be
registered in the name of the depository who shall be identified in the
Authorizing Resolution or supplemental indenture relating to such Securities
(the "Depository") or the nominee of such Depository, (ii) be delivered to the
Trustee as custodian for such Depository and (iii) bear any required legends.
Members of, or participants in, the Depository ("Agent
Members") shall have no rights under this Indenture with respect to any global
Security held on their behalf by the Depository, or the Trustee as its
custodian, or under the global Security, and the Depository may be treated by
the Company, the Trustee and any agent of the Company or the Trustee as the
absolute owner of the global Security for all purposes whatsoever.
Notwithstanding the foregoing, nothing herein shall prevent the Company, the
Trustee or any agent of the Company or the Trustee from giving effect to any
written certification, proxy or other authorization furnished by the Depository
or impair, as between the Depository and its Agent Members, the operation of
customary practices governing the exercise of the rights of a Holder of any
Security.
(b) Transfers of any global Security shall be limited to
transfers in whole, but not in part, to the Depository, its successors or their
respective nominees. Interests of beneficial owners in the global Security may
be transferred or exchanged for definitive Securities in accordance with the
rules and procedures of the Depository. In addition, defini tive Securities
shall be transferred to all beneficial owners in exchange for their beneficial
interests in a global Security if (i) the Depository notifies the Company that
it is unwilling or unable to continue as Depository for the global Security and
a successor depository is not appointed by the Company within 90 days of such
notice or (ii) an Event of Default has occurred and is continuing and the
Registrar has received a request from the Depository to issue definitive
Securities.
(c) In connection with any transfer or exchange of a portion
of the beneficial interest in any global Security to beneficial owners pursuant
to paragraph (b), the Registrar shall (if one or more definitive Securities are
to be issued) reflect on its books and records the date and a decrease in the
principal amount of the global Security in an amount equal to the principal
amount of the beneficial interest in the global Security to be transferred, and
the Company and the Guarantors shall execute, and the Trustee shall authenticate
and deliver, one or more definitive Securities of like tenor and amount.
(d) In connection with the transfer of an entire global
Security to beneficial owners pursuant to paragraph (b), the global Security
shall be deemed to be surrendered to the Trustee for cancellation, and the
Company and the Guarantors shall execute, and the Trustee shall authenticate and
deliver, to each beneficial owner identified by the Depository in exchange for
its beneficial interest in the global Security, an equal aggregate principal
amount of definitive Securities of authorized denominations.
(e) The Holder of any global Security may grant proxies and
otherwise authorize any person, including Agent Members and persons that may
hold interests through Agent Members, to take any action which a Holder is
entitled to take under this Indenture or the Securities of such Series.
ARTICLE THREE
Redemption
Section 3.01. Notices to Trustee.
Securities of a Series that are redeemable prior to maturity
shall be redeemable in accordance with their terms and, unless the Authorizing
Resolution or supplemental indenture provides otherwise, in accordance with this
Article.
If the Company wants to redeem Securities pursuant to
Paragraph 5 of the Securities, it shall notify the Trustee in writing of the
Redemption Date and the principal amount of Securities to be redeemed. Any such
notice may be cancelled at any time prior to notice of such redemption being
mailed to Holders. Any such cancelled notice shall be void and of no effect.
If the Company wants to credit any Securities previously
redeemed, retired or acquired against any redemption pursuant to Paragraph 6 of
the Securities, it shall notify the Trustee of the amount of the credit and it
shall deliver any Securities not previously delivered to the Trustee for
cancellation with such notice.
The Company shall give each notice provided for in this
Section 3.01 at least 30 days before the notice of any such redemption is to be
mailed to Holders (unless a shorter notice shall be satisfactory to the
Trustee).
Section 3.02. Selection of Securities to be Redeemed.
If fewer than all of the Securities of a Series are to be
redeemed, the Trustee shall select the Securities to be redeemed by a method the
Trustee considers fair and appropriate. The Trustee shall make the selection
from Securities outstanding not previously called for redemption and shall
promptly notify the Company of the serial numbers or other identifying
attributes of the Securities so selected. The Trustee may select for redemption
portions of the principal of Securities that have denominations larger than the
minimum denomination for the Series. Securities and portions of them it selects
shall be in amounts equal to the minimum denomination for the Series or an
integral multiple thereof. Provisions of this Indenture that apply to Securities
called for redemption also apply to portions of Securities called for
redemption.
Section 3.03. Notice of Redemption.
At least 30 days but not more than 60 days before a redemption
date, the Company shall mail a notice of redemption by first-class mail, postage
prepaid, to each Holder of Securities to be redeemed.
The notice shall identify the Securities to be redeemed and
shall state:
(1) the redemption date;
(2) the redemption price;
(3) the name and address of the Paying Agent;
(4) that Securities called for redemption must be
surrendered to the Paying Agent to collect the redemption price;
(5) that interest on Securities called for redemption ceases
to accrue on and after the redemption date; and
(6) that the Securities are being redeemed pursuant to the
mandatory redemption or the optional redemption provisions, as applicable.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at its expense; provided, however, that the
Company shall deliver to the Trustee at least 15 days prior to the date on which
notice of redemption is to be mailed or such shorter period as may be
satisfactory to the Trustee, an Officers' Certificate requesting that the
Trustee give such notice and setting forth the information to be stated in such
notice as provided in the preceding paragraph.
Section 3.04. Effect of Notice of Redemption.
Once notice of redemption is mailed, Securities called for
redemption become due and payable on the redemption date and at the redemption
price as set forth in the notice of redemption. Upon surrender to the Paying
Agent, such Securities shall be paid at the redemption price, plus accrued
interest to the redemption date.
Section 3.05. Deposit of Redemption Price.
On or before the redemption date, the Company shall deposit
with the Paying Agent immediately available funds sufficient to pay the
redemption price of and accrued interest on all Securities to be redeemed on
that date.
Section 3.06. Securities Redeemed in Part.
Upon surrender of a Security that is redeemed in part, the
Company and the Guarantors shall execute and the Trustee shall authenticate for
each Holder a new Security equal in principal amount to the unredeemed portion
of the Security surrendered.
ARTICLE FOUR
Covenants
Section 4.01. Payment of Securities.
The Company shall pay the principal of and interest on a
Series on the dates and in the manner provided in the Securities of the Series.
An installment of principal or interest shall be considered paid on the date it
is due if the Paying Agent holds on that date money designated for and
sufficient to pay the installment.
The Company shall pay interest on overdue principal at the
rate borne by the Series; it shall pay interest on overdue installments of
interest at the same rate.
Section 4.02. Maintenance of Office or Agency.
The Company shall maintain the office or agency required under
Section 2.03. The Company shall give prior written notice to the Trustee of the
location, and any change in the location, of such office or agency. If at any
time the Company shall fail to maintain any such required office or agency or
shall fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the address of the
Trustee.
Section 4.03. Compliance Certificate.
The Company shall deliver to the Trustee within 120 days after
the end of each fiscal year of the Company an Officers' Certificate stating
whether or not the signers know of any Default by the Company in performing any
of its obligations under this Indenture. If they do know of such a Default, the
certificate shall describe the Default.
Section 4.04. Payment of Taxes; Maintenance of Corporate
Existence; Maintenance of Properties.
The Company will:
(a) cause to be paid and discharged all lawful taxes,
assessments and governmental charges or levies imposed upon the Company and its
Restricted Subsidiaries or upon the income or profits of the Company and its
Restricted Subsidiaries or upon property or any part thereof belonging to the
Company and its Restricted Subsidiaries before the same shall be in default, as
well as all lawful claims for labor, materials and supplies which, if unpaid,
might become a lien or charge upon such property or any part thereof; provided,
however, that the Company shall not be required to cause to be paid or
discharged any such tax, assessment, charge, levy or claim so long as the
validity or amount thereof shall be contested in good faith by appropriate
proceedings and the nonpayment thereof does not, in the judgment of the Company,
materially adversely affect the ability of the Company and the Restricted
Subsidiaries to pay all obligations under the Indenture when due; and provided
further that the Company shall not be required to cause to be paid or discharged
any such tax, assessment, charge, levy or claim if, in the judgment of the
Company, such payment shall not be advantageous to the Company in the conduct of
its business and if the failure so to pay or discharge does not, in its
judgment, materially adversely affect the ability of the Company and the
Restricted Subsidiaries to pay all obligations under this Indenture when due;
(b) cause to be done all things necessary to preserve and keep
in full force and effect the corporate existence of the Company and each of its
Restricted Subsidiaries and to comply with all applicable laws; provided,
however, that nothing in this subsection (b) shall prevent a consolidation or
merger of the Company or any Restricted Subsidiary not prohibited by the
provisions of Article Five, Article Nine or any other provision or the
Authorizing Resolution or supplemental indenture pertaining to a Series, and the
Company need not maintain the corporate existence of an immaterial Restricted
Subsidiary which is not a Guarantor; and
(c) at all times keep, maintain and preserve all the property
of the Company and the Restricted Subsidiaries in good repair, working order and
condition (reasonable wear and tear excepted) and from time to time make all
needful and proper repairs, renewals, replacements, betterments and improvements
thereto, so that the business carried on in connection therewith may be properly
and advantageously conducted at all times; provided, however, that nothing in
this subsection (c) shall prevent the Company from discontinuing the operation
and maintenance of any such properties if such discontinuance is, in the
judgment of the Company, desirable in the conduct of its business and not
disadvantageous in any material respect to the ability of the Company and the
Restricted Subsidiaries to pay all obligations under this Indenture when due.
Section 4.05. Additional Guarantors.
If the Company or any of the Guarantors transfers or causes to
be transferred, in one transaction or a series of related transactions, any
property to any Restricted Subsidiary of the Company that is not a Guarantor, or
if the Company or any of the Guarantors shall organize, acquire or otherwise
invest in another Subsidiary which becomes a Restricted Subsidiary, then such
transferee or acquired or other Subsidiary shall (i) execute and deliver to the
Trustee a supplemental indenture in form reasonably satisfactory to the Trustee
pursuant to which such Subsidiary shall unconditionally guarantee all of the
Company's obligations under the Securities of any Series that has the benefit of
Guarantees of other Subsidiaries of the Company and this Indenture (as it
relates to all such Series) on the terms set forth in this Indenture and (ii)
deliver to the Trustee an Opinion of Counsel that such supplemental indenture
has been duly authorized, executed and delivered by such Subsidiary and
constitutes a legal, valid, binding and enforceable obligation of such
Subsidiary. Thereafter, such Subsidiary shall be a Guarantor for all purposes of
this Indenture (as it relates to all such Series).
ARTICLE FIVE
Successor Corporation
Section 5.01. When Company May Merge, etc.
The Company shall not consolidate with or merge with or into,
any other corporation, or transfer all or substantially all of its assets to,
any entity unless permitted by law and unless (1) the resulting, surviving or
transferee entity, which shall be a corporation organized and existing under the
laws of the United States or a State thereof, assumes by supplemental indenture,
in a form reasonably satisfactory to the Trustee, all of the obligations of the
Company under the Securities and this Indenture and (2) immediately after giving
effect to, and as a result of, such transaction, no Default or Event of Default
shall have occurred and be continuing. Thereafter such successor corporation or
corporations shall succeed to and be substituted for the Company with the same
effect as if it had been named herein as the "Company" and all such obligations
of the predecessor corporation shall terminate.
The Company shall deliver to the Trustee prior to the
consummation of the proposed transaction an Officers' Certificate to the
foregoing effect and an Opinion of Counsel stating that the proposed transaction
and such supplemental indenture comply with this Indenture.
To the extent that an Authorizing Resolution or supplemental
indenture pertaining to any Series provides for different provisions relating to
the subject matter of this Article Five, the provisions in such Authorizing
Resolution or supplemental indenture shall govern for purposes of such Series.
ARTICLE SIX
Defaults and Remedies
Section 6.01. Events of Default.
An "Event of Default" on a Series occurs if, voluntarily or
involuntarily, whether by operation of law or otherwise, any of the following
occurs:
(1) the failure by the Company to pay interest on any
Security of such Series when the same becomes due and payable and the
continuance of any such failure for a pe riod of 30 days, whether or not such
payment is prohibited by Article Twelve or Article Thirteen hereof;
(2) the failure by the Company to pay the principal or
premium of any Security of such Series when the same becomes due and payable at
maturity, upon acceleration or otherwise, whether or not such payment is
prohibited by Article Twelve or Article Thirteen hereof;
(3) the failure by the Company or any Restricted Subsidiary
to comply with any of its agreements or covenants in, or provisions of, the
Securities of such Series, the Guarantees (as they relate thereto) or this
Indenture (as they relate thereto) and such failure continues for the period and
after the notice specified below (except in the case of a default with respect
to any Change of Control Provisions or Article Five (or any replacement
provisions as contemplated by Article Five), which will constitute Events of
Default with notice but without passage of time);
(4) the acceleration of any Indebtedness (other than
Non-Recourse Indebtedness) of the Company or any Restricted Subsidiary in an
amount of $20 million or more, individually or in the aggregate, and such
acceleration does not cease to exist, or such Indebtedness is not satisfied, in
either case within five days after such acceleration;
(5) the failure by the Company or any Restricted Subsidiary
to make any principal or interest payment in an amount of $20 million or more,
individually or in the aggregate, in respect of Indebtedness (other than
Non-Resource Indebtedness) of the Company or any Restricted Subsidiary within
five days of such principal or interest becoming due and payable (after giving
effect to any applicable grace period set forth in the documents governing such
Indebtedness);
(6) a final judgment or judgments in an amount of $20
million or more, individually or in the aggregate, for the payment of money
having been entered by a court or courts of competent jurisdiction against the
Company or any of its Restricted Subsidiaries and such judgment or judgments is
not satisfied, stayed, annulled or rescinded within 60 days of being entered;
(7) the Company or any Restricted Subsidiary that is a
Significant Subsidiary pursuant to or within the meaning of any Bankruptcy Law:
(A) commences a voluntary case,
(B) consents to the entry of an order for relief
against it in an involuntary case,
(C) consents to the appointment of a Custodian of it
or for all or substantially all of its property, or
(D) makes a general assignment for the benefit of its
creditors;
(8) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that:
(A) is for relief against the Company or any
Restricted Subsidiary that is a Significant Subsidiary as
debtor in an involuntary case,
(B) appoints a Custodian of the Company or any
Restricted Subsidiary that is a Significant Subsidiary or a
Custodian for all or substantially all of the property of
the Company or any Restricted Subsidiary that is a
Significant Subsidiary, or
(C) orders the liquidation of the Company or any
Restricted Subsidiary that is a Significant Subsidiary, and
the order or decree remains unstayed and in effect for 60
days; or
(9) any Guarantee of a Guarantor which is a Significant
Subsidiary ceases to be in full force and effect (other than in accordance with
the terms of such Guarantee and the Indenture) or is declared null and void and
unenforceable or found to be invalid or any Guarantor denies its liability under
its Guarantee (other than by reason of release of a Guarantor from its Guarantee
in accordance with the terms of the Indenture and the Guarantee).
A Default as described in sub-clause (3) above will not be
deemed an Event of Default until the Trustee notifies the Company, or the
Holders of at least 25 percent in principal amount of the then outstanding
Securities of the applicable Series notify the Company and the Trustee, of the
Default and (except in the case of a default with respect to any Change of
Control Provisions or Article Five (or any replacement provisions as
contemplated by Article Five)) the Company does not cure the Default within 60
days after receipt of the notice. The notice must specify the Default, demand
that it be remedied and state that the notice is a "Notice of Default." If such
a Default is cured within such time period, it ceases.
The term "Custodian" means any receiver, trustee, assignee,
liquidator, custodian or similar official under any Bankruptcy Law.
Section 6.02. Acceleration.
If an Event of Default (other than an Event of Default with
respect to the Company resulting from sub-clauses (7) or (8) above), shall have
occurred and be continuing under the Indenture, the Trustee by notice to the
Company, or the Holders of at least 25 percent in principal amount of the
Securities of the applicable Series then outstanding by notice to the Company
and the Trustee, may declare all Securities of such Series to be due and payable
immediately. Upon such declaration of acceleration, the amounts due and payable
on the Securities of such Series will be due and payable immediately. If an
Event of Default with respect to the Company specified in sub-clauses (7) or (8)
above occurs, all amounts due and payable on the Securities of such Series will
ipso facto become and be immediately due and payable without any declaration,
notice or other act on the part of the Trustee and the Company or any Holder.
The Holders of a majority in principal amount of the Securities of such Series
then outstanding by written notice to the Trustee and the Company may waive any
Default or Event of Default (other than any Default or Event of Default in
payment of principal or interest) with respect to such Series of Securities
under the Indenture. Holders of a majority in principal amount of the then
outstanding Securities of such Series may rescind an acceleration with respect
to such Series and its consequence (except an acceleration due to nonpayment of
principal or interest on the Securities of such Series) if the rescission would
not conflict with any judgment or decree and if all existing Events of Default
have been cured or waived.
No such rescission shall extend to or shall affect any
subsequent Event of Default, or shall impair any right or power consequent
thereon.
Section 6.03. Other Remedies.
If an Event of Default on a Series occurs and is continuing,
the Trustee may pursue any available remedy by proceeding at law or in equity to
collect the payment of principal of or interest on the Series or to enforce the
performance of any provision in the Securities or this Indenture applicable to
the Series.
The Trustee may maintain a proceeding even if it does not
possess any of the Securities or does not produce any of them in the proceeding.
A delay or omission by the Trustee or any Securityholder in exercising any right
or remedy accruing upon an Event of Default shall not impair the right or remedy
or constitute a waiver of or acquiescence in the Event of Default. No remedy is
exclusive of any other remedy. All available remedies are cumulative.
Section 6.04. Waiver of Existing Defaults.
Subject to Section 10.02, the Holders of a majority in
principal amount of the outstanding Securities of a Series on behalf of all the
Holders of the Series by notice to the Trustee may waive an existing Default on
such Series and its consequences. When a Default is waived, it is cured and
stops continuing, and any Event of Default arising therefrom shall be deemed to
have been cured; but no such waiver shall extend to any subsequent or other
Default or impair any right consequent thereon.
Section 6.05. Control by Majority.
The Holders of a majority in principal amount of the
outstanding Securities of a Series may direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or exercising
any trust or power conferred on it with respect to such Series. The Trustee,
however, may refuse to follow any direction (i) that conflicts with law or this
Indenture, (ii) that, subject to Section 7.01, the Trustee determines is unduly
prejudicial to the rights of other Securityholders, (iii) that would involve the
Trustee in personal liability or (iv) if the Trustee shall not have been
provided with indemnity satisfactory to it.
Section 6.06. Limitation on Suits.
A Securityholder of a Series may not pursue any remedy with
respect to this Indenture or the Series unless:
(1) the Holder gives to the Trustee written notice of a
continuing Event of Default on the Series;
(2) the Holders of at least a majority in principal amount
of the outstanding Securities of the Series make a written request to the
Trustee to pursue the remedy;
(3) such Holder or Holders offer to the Trustee indemnity
satisfactory to the Trustee against any loss, liability or expense;
(4) the Trustee does not comply with the request within 60
days after receipt of the request and the offer of indemnity; and
(5) no written request inconsistent with such written
request shall have been given to the Trustee pursuant to this Section 6.06.
A Securityholder may not use this Indenture to prejudice the
rights of another Securityholder or to obtain a preference or priority over
another Securityholder.
Section 6.07. Rights of Holders to Receive Payment.
Notwithstanding any other provision of this Indenture, the
right of any Holder to receive payment of principal of and interest on the
Security, on or after the respective due dates expressed in the Security, or to
bring suit for the enforcement of any such payment on or after such respective
dates, is absolute and unconditional and shall not be impaired or affected
without the consent of the Holder.
Section 6.08. Collection Suit by Trustee.
If an Event of Default in payment of interest or principal
specified in Section 6.01(1) or (2) occurs and is continuing, the Trustee may
recover judgment in its own name and as trustee of an express trust against the
Company for the whole amount of principal and interest remaining unpaid.
Section 6.09. Trustee May File Proofs of Claim.
The Trustee may file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses,
disbursements, and advances of the Trustee, its agents and counsel) and the
Securityholders allowed in any judicial proceedings relative to the Company, its
creditors or its property, and unless prohibited by applicable law or
regulation, may vote on behalf of the Holders in any election of a Custodian,
and shall be entitled and empowered to collect and receive any moneys or other
property payable or deliverable on any such claims and to distribute the same
and any Custodian in any such judicial proceeding is hereby authorized by each
Securityholder to make such payments to the Trustee. Nothing herein 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 or the rights of
any Holder or to authorize the Trustee to vote in respect of the claim of any
Securityholder except as aforesaid for the election of the Custodian.
Section 6.10. Priorities.
If the Trustee collects any money pursuant to this Article, it
shall pay out the money in the following order:
First: to the Trustee for amounts due under Section 7.07;
Second: to Securityholders of the Series for amounts due and
unpaid on the Series for principal and interest, ratably, without preference or
priority of any kind, according to the amounts due and payable on the Series for
principal and interest, respectively; and
Third: to the Company or the Guarantors as their interests may
appear.
The Trustee may fix a record date and payment date for any
payment to Securityholders pursuant to this Section 6.10.
Section 6.11. Undertaking for Costs.
In any suit for the enforcement of any right or remedy under
this Indenture or in any suit against the Trustee for any action taken or
omitted by it as Trustee, a court in its discretion may require the filing by
any party litigant in the suit of an undertaking to pay the costs of the suit,
and the court in its discretion may assess reasonable costs, including
reasonable attorneys' fees, against any party litigant in the suit, having the
due regard to the merits and good faith of the claims or defenses made by the
party litigant. This Section does not apply to a suit by the Trustee, a suit by
a Holder pursuant to Section 6.07 or a suit by Holders of more than 10% in
principal amount of the Series.
ARTICLE SEVEN
Trustee
Section 7.01. Duties of Trustee.
(a) If an Event of Default has occurred and is continuing, the
Trustee shall, prior to the receipt of directions from the Holders of a majority
in principal amount of the Securities, exercise its rights and powers and use
the same degree of care and skill in their exercise as a prudent man would
exercise or use under the circumstances in the conduct of his own affairs.
(b) Except during the continuance of an Event of Default:
(1) The Trustee need perform only those duties that are
specifically set forth in this Indenture and no others and no implied covenants
or obligations shall be read into this Indenture against the Trustee.
(2) In the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon certificates or opinions furnished to the
Trustee and conforming to the requirements of this Indenture. The Trustee,
however, shall examine the certificates and opinions to determine whether or not
they conform to the requirements of this Indenture but need not confirm or
investigate the accuracy of mathematical calculations or other facts or matters
stated therein.
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own willful
misconduct, except that:
(1) This paragraph does not limit the effect of paragraph (b)
of this Section.
(2) The Trustee shall not be liable for any error of judgment
made in good faith by a Trust Officer, unless it is proved that the Trustee was
negligent in ascertaining the pertinent facts.
(3) The Trustee shall not be liable with respect to any action
it takes or omits to take in good faith in accordance with a direction received
by it pursuant to Section 6.05 or any other direction of the Holders permitted
hereunder.
(d) Every provision of this Indenture that in any way relates
to the Trustee is subject to paragraphs (a), (b) and (c) of this Section.
(e) The Trustee may refuse to perform any duty or exercise any
right or power unless it receives indemnity satisfactory to it against any loss,
liability or expense.
(f) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree with the Company. Money held in
trust by the Trustee need not be segregated from other funds except to the
extent required by law.
(g) None of the provisions contained in this Indenture shall
require the Trustee to expend or risk its own funds or otherwise incur 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 grounds for believing that
the repayment of such funds or adequate indemnity against such liability is not
reasonably assured to it.
Section 7.02. Rights of Trustee.
Subject to Section 7.01:
(a) The Trustee may rely and shall be protected in acting or
refraining from acting on any document, resolution, certificate, instrument,
report, or direction believed by it to be genuine and to have been signed or
presented by the proper person. The Trustee need not investigate any fact or
matter stated in the document, resolution, certificate, instrument, report, or
direction.
(b) Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel or both, which shall
conform to Sections 11.04 and 11.05 hereof and containing such other statements
as the Trustee reasonably deems necessary to perform its duties hereunder. The
Trustee shall not be liable for any action it takes or omits to take in good
faith in reliance on the Officers' Certificate, Opinion of Counsel or any other
direction of the Company permitted hereunder.
(c) The Trustee may act through agents and shall not be
responsible for the misconduct or negligence of any agent appointed with due
care.
(d) The Trustee shall not be liable for any action taken,
suffered or omitted by it in good faith and believed by it to be authorized or
within the discretion or rights or powers conferred upon it by this Indenture.
(e) The Trustee may consult with counsel, and the written
advice of such counsel or any Opinion of Counsel as to matters of law shall be
full and complete authorization and protection in respect of any action taken,
omitted or suffered by it hereunder in good faith and in accordance with the
advice or opinion of such counsel.
(f) Unless otherwise specifically provided in the Indenture,
any demand, request, direction or notice from the Company shall be sufficient if
signed by an Officer of the Company.
(g) For all purposes under this Indenture, the Trustee shall
not be deemed to have notice or knowledge of any Event of Default (other than
under Section 6.01(1) or 6.01(2)) unless a Trust Officer assigned to and working
in the Trustee's corporate trust office has actual knowledge thereof or unless
written notice of any Event of Default is received by the Trustee at its address
specified in Section 11.02 hereof and such notice references the Securities
generally, the Company or this Indenture.
Section 7.03. Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become
the owner or pledgee of Securities and may otherwise deal with the Company or
its affiliates with the same rights it would have if it were not Trustee. Any
Agent may do the same with like rights. The Trustee, however, must comply with
Sections 7.10 and 7.11.
Section 7.04. Trustee's Disclaimer.
The Trustee makes no representation as to the validity or
adequacy of this Indenture, the Securities or of any prospectus used to sell the
Securities; it shall not be ac countable for the Company's use of the proceeds
from the Securities; it shall not be accountable for any money paid to the
Company, or upon the Company's direction, if made under and in accordance with
any provision of this Indenture; it shall not be responsible for the use or
application of any money received by any Paying Agent other than the Trustee;
and it shall not be responsible for any statement of the Company in this
Indenture or in the Securities other than its certificate of authentication.
Section 7.05. Notice of Defaults.
If a Default on a Series occurs and is continuing and if it is
known to the Trustee, the Trustee shall mail to each Securityholder of the
Series notice of the Default (which shall specify any uncured Default known to
it) within 90 days after it occurs. Except in the case of a default in payment
of principal of or interest on a Series, the Trustee may withhold the notice if
and so long as the board of directors of the Trustee, the executive or any trust
committee of such directors and/or responsible officers of the Trustee in good
faith determine(s) that withholding the notice is in the interests of Holders of
the Series.
Section 7.06. Reports by Trustee to Holders.
Within 60 days after each May 15 beginning with the May 15
following the date of this Indenture, the Trustee shall mail to each
Securityholder a brief report dated as of such May 15 that complies with TIA ss.
313(a) (but if no event described in TIA ss. 313(2) has occurred within the
twelve months preceding the reporting date no report need be transmitted). The
Trustee also shall comply with TIA ss. 313(b).
A copy of each report at the time of its mailing to
Securityholders shall be delivered to the Company and filed by the Trustee with
the SEC and each national securities exchange on which the Securities are
listed. The Company agrees to notify the Trustee of each national securities
exchange on which the Securities are listed.
Section 7.07. Compensation and Indemnity.
The Company shall pay to the Trustee or predecessor trustee
from time to time reasonable compensation for their respective services subject
to any written agreement between the Trustee and the Company. The Company shall
reimburse the Trustee upon request for all reasonable out-of-pocket expenses in
curred by it. Such expenses shall include the reasonable compensation and
expenses of the Trustee's agents and counsel. The Company shall indemnify the
Trustee and each predecessor trustee, its officers, directors, employees and
agents and hold it harmless against any loss, liability or expense incurred or
made by or on behalf of it in connection with the administration of this
Indenture or the trust hereunder and its duties hereunder including the costs
and expenses of defending itself against or investigating any claim in the
premises. The Trustee shall notify the Company promptly of any claim for which
it may seek indemnity. The Company need not reimburse any expense or indemnify
against any loss or liability incurred by the Trustee through the Trustee's, or
its officers', directors', employees' or agents' negligence or bad faith.
To ensure the Company's payment obligations in this Section,
the Trustee shall have a claim prior to the Securities on all money or property
held or collected by the Trustee, except that held in trust to pay principal of
or interest on particular Securities. When the Trustee incurs expenses or
renders services in connection with an Event of Default specified in Section
6.01 or in connection with Article 6 hereof, the expenses (including the
reasonable fees and expenses of its counsel) and the compensation for services
in connection therewith are to constitute expenses of administration under any
bankruptcy law.
Section 7.08. Replacement of Trustee.
The Trustee may resign by so notifying the Company. The
Holders of a majority in principal amount of the outstanding Securities may
remove the Trustee by so notifying the removed Trustee in writing and may
appoint a successor trustee with the Company's consent. Such resignation or
removal shall not take effect until the appointment by the Securityholders or
the Company as hereinafter provided of a successor trustee and the acceptance of
such appointment by such successor trustee. The Company may remove the Trustee
and any Securityholder may petition any court of competent jurisdiction for the
removal of the Trustee and the appointment of a successor trustee for any or no
reason, including if:
(1) the Trustee fails to comply with Section 7.10 after
written request by the Company or any bona fide Securityholder who has been a
Securityholder for at least six months;
(2) the Trustee is adjudged a bankrupt or an insolvent;
(3) a receiver or other public officer takes charge of the
Trustee or its property; or (4) the Trustee becomes
incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in
the office of Trustee for any reason, the Company shall promptly appoint a
successor trustee. If a successor trustee does not take office within 45 days
after the retiring Trustee resigns or is removed, the retiring Trustee, the
Company or any Holder may petition any court of competent jurisdiction for the
appointment of a successor trustee.
A successor trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Immediately after that,
the retiring Trustee shall transfer all property held by it as Trustee to the
successor trustee, the resignation or removal of the retiring Trustee shall
become effective, and the successor trustee shall have all the rights, powers
and duties of the Trustee under this Indenture. A successor trustee shall mail
notice of its succession to each Securityholder.
Section 7.09. Successor Trustee by Merger, etc.
If the Trustee consolidates with, merges with or into or
converts into, or transfers all or substantially all of its corporate trust
business to, another corporation, the successor corporation without any further
act shall be the successor trustee.
Section 7.10. Eligibility; Disqualification.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA ss. 310(a)(1). The Trustee shall have a combined capital and
surplus of at least $10,000,000 as set forth in its most recent published annual
report of condition. The Trustee shall comply with TIA ss. 310(b).
Section 7.11. Preferential Collection of Claims
Against Company.
The Trustee shall comply with TIA ss. 311(a), excluding any
creditor relationship listed in TIA ss. 311(b). A Trustee who has resigned or
been removed shall be subject to TIA ss. 311(a) to the extent indicated therein.
ARTICLE EIGHT
Discharge of Indenture
Section 8.01. Defeasance upon Deposit of Moneys or
U.S. Government Obligations.
(a) The Company may, at its option and, subject to the
provisions of Article Twelve and Article Thirteen hereof, at any time, elect to
have either paragraph (b) or paragraph (c) below be applied to the outstanding
Securities of any Series upon compliance with the applicable conditions set
forth in paragraph (d).
(b) Upon the Company's exercise under paragraph (a) of the
option applicable to this paragraph (b), the Company and the Guarantors shall be
deemed to have been released and discharged from their respective obligations
with respect to the outstanding Securities of a Series on the date the
applicable conditions set forth below are satisfied (hereinafter, "Legal
Defeasance"). For this purpose, such Legal Defeasance means that the Company
shall be deemed to have paid and discharged the entire Indebtedness represented
by the outstanding Securities of a Series, which shall thereafter be deemed to
be "outstanding" only for the purposes of the Sections and matters under this
Indenture referred to in (i) and (ii) below, and to have satisfied all its other
obligations under such Securities and this Indenture insofar as such Securities
are concerned, except for the following which shall survive until otherwise
terminated or discharged hereunder: (i) the rights of Holders of outstanding
Securities of a Series to receive solely from the trust fund described in
paragraph (d) below and as more fully set forth in such paragraph, payments in
respect of the principal of and interest on such Securities when such payments
are due and (ii) obligations listed in Section 8.02, subject to compliance with
this Section 8.01. The Company may exercise its option under this paragraph (b)
notwithstanding the prior exercise of its option under paragraph (c) below with
respect to such Securities.
(c) Upon the Company's exercise under paragraph (a) of the
option applicable to this paragraph (c), the Company and the Guarantors shall be
released and discharged from the obligations under any covenant contained in
Article Five, Section 4.05 and any other covenant contained in the Authorizing
Reso lution or supplemental indenture relating to such Series to the extent
provided for therein, on and after the date the conditions set forth below are
satisfied (hereinafter, "Covenant Defeasance"), and the Securities of such
Series shall thereafter be deemed to be not "outstanding" for the purpose of any
direction, waiver, consent or declaration or act of Holders (and the
consequences of any thereof) in connection with such covenants, but shall
continue to be deemed "outstanding" for all other purposes hereunder. For this
purpose, such Covenant Defeasance means that, with respect to the outstanding
Securities of a Series, the Company may omit to comply with and shall have no
liability in respect of any term, condition or limitation set forth in any such
covenant, whether directly or indirectly, by reason of any reference elsewhere
herein to any such covenant or by reason of any reference in any such covenant
to any other provision herein or in any other document and such omission to
comply shall not constitute a Default or an Event of Default under Section
6.01(3), but, except as specified above, the remainder of this Indenture and
such Securities shall be unaffected thereby.
(d) The following shall be the conditions to application of
either paragraph (b) or paragraph (c) above to the outstanding Securities of the
applicable Series:
(1) The Company shall have irrevocably deposited in trust
with the Trustee, pursuant to an irrevocable trust and security agreement in
form and substance reasonably satisfactory to the Trustee, money in U.S. dollars
or U.S. government obligations or a combination thereof in such amounts and at
such times as are sufficient, in the opinion of a nationally recognized firm of
independent public accountants, to pay the principal of and interest on the
outstanding Securities of such Series to maturity or redemption; provided,
however, that the Trustee (or other qualifying trustee) shall have received an
irrevocable written order from the Company instructing the Trustee (or other
qualifying trustee) to apply such money or the proceeds of such U.S. government
obligations to said payments with respect to the Securities of such Series to
maturity or redemption;
(2) No Default or Event of Default shall have occurred and
be continuing on the date of such deposit;
(3) Such deposit will not result in a Default under this
Indenture or a breach or violation of, or constitute a default under, any other
material instrument or agree ment to which the Company or any of any of their
Subsidiaries is a party or by which it or any of their property is bound;
(4) (i) In the event the Company elects paragraph (b)
hereof, the Company shall deliver to the Trustee an Opinion of Counsel in the
United States, in form and substance reasonably satisfactory to the Trustee, to
the effect that (A) the Company has received from, or there has been published
by, the Internal Revenue Service a ruling or (B) since the Issue Date pertaining
to such Series, there has been a change in the applicable federal income tax
law, in either case to the effect that, and based thereon such Opinion of
Counsel shall state that, or (ii) in the event the Company elects paragraph (c)
hereof, the Company shall deliver to the Trustee an Opinion of Counsel in the
United States, in form and substance reasonably satisfactory to the Trustee, to
the effect that, in the case of clauses (i) and (ii), 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 and the defeasance contemplated hereby and
will be subject to federal income tax in the same amounts and in the same manner
and at the same times as would have been the case if such deposit and defeasance
had not occurred;
(5) The Company shall have delivered to the Trustee an
Officers' Certificate, stating that the deposit under clause (1) was not made by
the Company with the intent of preferring the Holders of the Securities of such
Series over any other creditors of the Company or with the intent of defeating,
hindering, delaying or defrauding any other creditors of the Company or others;
(6) The Company shall have delivered to the Trustee an
Opinion of Counsel, reasonably satisfactory to the Trustee, to the effect that,
(A) the trust funds will not be subject to the rights of Holders of Indebtedness
of the Company other than the Securities of such Series and (B) assuming no
intervening bankruptcy of the Company between the date of deposit and the 91st
day following the deposit and that no Holder of Securities of such Series is an
insider of the Company, after the 91st day following the deposit, the trust
funds will not be subject to any applicable bankruptcy, insolvency,
reorganization or similar law affecting creditors' rights generally; and
(7) The Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent specified herein relating to the defeasance contemplated by this
Section 8.01 have been complied with.
In the event all or any portion of the Securities of a Series
are to be redeemed through such irrevocable trust, the Company must make
arrangements satisfactory to the Trustee, at the time of such deposit, for the
giving of the notice of such redemption or redemptions by the Trustee in the
name and at the expense of the Company.
(e) In addition to the Company's rights above under this
Section 8.01, the Company may terminate all of its obligations under this
Indenture with respect to a Series, and the obligations of the Guarantors shall
terminate with respect to such Series (subject to Section 8.02), when:
(1) All Securities of such Series theretofore authenticated
and delivered (other than Securities which have been destroyed, lost or stolen
and which have been replaced or paid as provided in Section 2.07 and Securities
for whose payment money has theretofore been deposited in trust or segregated
and held in trust by the Company and thereafter repaid to the Company or
discharged from such trust) have been delivered to the Trustee for cancellation
or all such Securities not theretofore delivered to the Trustee for cancellation
have become due and payable and the Company has irrevocably deposited or caused
to be deposited with the Trustee as trust funds in trust solely for that purpose
an amount of money sufficient to pay and discharge the entire Indebtedness on
the Securities not theretofore delivered to the Trustee for cancellation, for
principal of and interest;
(2) The Company has paid or caused to be paid all other sums
payable hereunder by the Company;
(3) The Company has delivered irrevocable instructions to
the Trustee to apply the deposited money toward the payment of the Securities at
maturity or redemption, as the case may be; and
(4) The Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, stating that all conditions precedent
specified herein relating to the satisfaction and discharge of this Indenture
have been complied with.
Section 8.02. Survival of the Company's Obligations.
Notwithstanding the satisfaction and discharge of the
Indenture under Section 8.01, the Company's obligations in paragraph 9 of the
Securities and Sections 2.03 through 2.07, 4.01, 7.07, 7.08, 8.04 and 8.05,
however, shall survive until the Securities of an applicable Series are no
longer outstanding. Thereafter, the Company's obligations in paragraph 9 of the
Securities of such Series and Sections 7.07, 8.04 and 8.05 shall survive (as
they relate to such Series).
Section 8.03. Application of Trust Money.
The Trustee shall hold in trust money or U.S. government
obligations deposited with it pursuant to Section 8.01. It shall apply the
deposited money and the money from U.S. government obligations in accordance
with this Indenture to the payment of principal of and interest on the
Securities of the defeased Series.
Section 8.04. Repayment to the Company.
The Trustee and the Paying Agent shall promptly pay to the
Company upon request any excess money or securities held by them at any time.
The Trustee and the Paying Agent shall pay to the Company upon request any money
held by them for the payment of principal or interest that remains unclaimed for
two years, provided, however, that the Trustee or such Paying Agent, before
being required to make any such repayment, may at the expense of the Company
cause to be published once in a newspaper of general circulation in the City of
New York or mail to each such Holder notice that such money remains unclaimed
and that, after a date specified therein, which shall not be less than 30 days
from the date of such publication or mailing, any unclaimed balance of such
money then remaining will be repaid to the Company. After payment to the
Company, Securityholders entitled to the money must look to the Company or any
Guarantor for payment as general creditors unless applicable abandoned property
law designates another person and all liability of the Trustee or such Paying
Agent with respect to such money shall cease.
Section 8.05. Reinstatement.
If the Trustee is unable to apply any money or U.S. government
obligations in accordance with Section 8.01 by reason of any legal proceeding or
by reason of any order or judgment of any court or governmental authority
enjoining, restraining or otherwise prohibiting such application, the Company's
and each Guarantor's obligations under this Indenture and the Securities
relating to the Series shall be revived and reinstated as though no deposit had
occurred pursuant to Section 8.01 until such time as the Trustee is permitted to
apply all such money or U.S. government obligations in accordance with Section
8.01; provided, however, that (a) if the Company has made any payment of
interest on or principal of any Securities of the Series because of the
reinstatement of their obligations, the Company shall be subrogated to the
rights of the Holders of such Securities to receive such payment from the money
or U.S. government obligations held by the Trustee and (b) unless otherwise
required by any legal proceeding or any order or judgment of any court or
governmental authority, the Trustee shall return all such money or U.S.
government obligations to the Company promptly after receiving a written request
therefor at any time, if such reinstatement of the Company's obligations has
occurred and continue to be in effect.
ARTICLE NINE
GUARANTEES
Section 9.01. Unconditional Guarantees.
Subject to any other provisions set forth in the Authorizing
Resolution or supplemental indenture relating to a particular Series, each
Guarantor hereby unconditionally, jointly and severally, guarantees (each such
guarantee to be referred to herein as the "Guarantee") to each Holder of
Securities of such Series authenticated and delivered by the Trustee and to the
Trustee and its successors and assigns, that: (i) the principal of and interest
on the Securities of such Series will be promptly paid in full when due, subject
to any applicable grace period, whether at maturity, by acceleration or
otherwise and interest on the overdue principal, if any, and interest on any
interest of the Securities of such Series and all other obligations of the
Company to the Holders or the Trustee hereunder or thereunder, except
obligations to pay principal and interest in any other Series not so guaranteed,
will be promptly paid in full or performed, all in accordance with the terms
hereof and thereof; and (ii) in case of any ex tension of time of payment or
renewal of any Securities of such Series or of any such other obligations, the
same will be promptly paid in full when due or performed in accordance with the
terms of the extension or renewal, subject to any applicable grace period,
whether at stated maturity, by acceleration or otherwise, subject, however, in
the case of clauses (i) and (ii) above, to the limitations set forth in Section
9.04. Each Guarantor hereby agrees that its obligations hereunder shall be
unconditional, irrespective of the validity, regularity or enforceability of the
Securities of such Series or this Indenture, the absence of any action to
enforce the same, any waiver or consent by any Holder of the Securities of such
Series with respect to any provisions hereof or thereof, the recovery of any
judgment against the Company, any action to enforce the same or any other
circumstance which might otherwise constitute a legal or equitable discharge or
defense of a guarantor. Each Guarantor hereby waives diligence, presentment,
demand of payment, filing of claims with a court in the event of insolvency or
bankruptcy of the Company, any right to require a proceeding first against the
Company, protest, notice and all demands whatsoever and covenants that, subject
to Section 9.03, this Guarantee will not be discharged except by complete
performance of the obligations contained in the Securities of the applicable
Series, this Indenture and in this Guarantee. If any Holder or the Trustee is
required by any court or otherwise to return to the Company, any Guarantor, or
any custodian, trustee, liquidator or other similar official acting in relation
to the Company or any Guarantor, any amount paid by the Company or any Guarantor
to the Trustee or such Holder, this Guarantee, to the extent theretofore
discharged, shall be reinstated in full force and effect. Each Guarantor further
agrees that, as between each Guarantor, on the one hand, and the Holders and the
Trustee, on the other hand, (x) the maturity of the obligations guaranteed
hereby may be accelerated as provided in Article Six for the purposes of this
Guarantee, notwithstanding any stay, injunction or other prohibition preventing
such acceleration in respect of the obligations guaranteed hereby, and (y) in
the event of any acceleration of such obligations as provided in Article Six,
such obligations (whether or not due and payable) shall forthwith become due and
payable by each Guarantor for the purpose of this Guarantee.
Section 9.02. Severability.
In case any provision of this Guarantee shall be invalid,
illegal or unenforceable, the validity, legality, and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
Section 9.03. Release of a Guarantor.
Upon the sale or disposition (whether by merger, stock
purchase, asset sale or otherwise) of a Guarantor (or all or substantially all
its assets) to an entity which is not a Restricted Subsidiary and which sale or
disposition is otherwise in compliance with the terms of this Indenture, or,
unless the Company elects otherwise, if any Guarantor is designated as an
Unrestricted Subsidiary in accordance with the terms of this Indenture, then
such Guarantor (in the event of a sale or other disposition of Capital Stock of
such Guarantor or a designation as an Unrestricted Subsidiary) or the Person
acquiring such assets (in the event of a sale or other disposition of all or
substantially all of the assets of such Guarantor) shall be deemed automatically
and unconditionally released and discharged from all obligations under this
Article Nine without any further action required on the part of the Trustee or
any Holder.
An Unrestricted Subsidiary that is a Guarantor shall be deemed
automatically and unconditionally released and discharged from all obligations
under this Article Nine upon notice from the Company to the Trustee to such
effect, without any further action required on the part of the Trustee or any
Holder.
The Trustee shall deliver an appropriate instrument evidencing
any such release upon receipt of a request by the Company accompanied by an
Officers' Certificate and Opinion of Counsel certifying as to the compliance
with this Section 9.03.
Any Guarantor not released in accordance with this Section
9.03 remains liable for the full amount of principal of and interest on the
Securities as provided in this Article Nine.
Section 9.04. Limitation of a Subsidiary Guarantor's Liability.
Each Guarantor and by its acceptance hereof each Holder hereby
confirms that it is the intention of all such parties that the guarantee by such
Guarantor pursuant to its Guarantee not constitute a fraudulent transfer or
conveyance for purposes of the Bankruptcy Law, the Uniform Fraudulent Conveyance
Act, the Uniform Fraudulent Transfer Act or any similar Federal or state law. To
effectuate the foregoing intention, the Holders and such Guarantor hereby
irrevocably agree that the obligations of such Guarantor under the Guarantee
shall be limited to the maximum amount as will, after giving effect to all other
contingent and fixed liabilities of such Guarantor and after giving effect to
any collections from or payments made by or on behalf of any other Guarantor in
respect of the obligations of such other Guarantor under its Guarantee or
pursuant to Section 9.06, result in the obligations of such Guarantor under the
Guarantee not constituting such fraudulent transfer or conveyance.
Section 9.05. Guarantors May Consolidate,
etc., on Certain Terms.
Nothing contained in this Indenture or in any of the
Securities shall prevent any consolidation or merger of a Guarantor with or into
the Company or another Restricted Guarantor, or shall prevent any sale of assets
or conveyance of the property of a Subsidiary Guarantor as an entirety or
substantially as an entirety to the Company or another Guarantor that is a
Restricted Subsidiary of the Company. Upon any such consolidation, merger, sale
or conveyance, the Guarantee given by such Guarantor shall no longer have any
force or effect.
Section 9.06. Contribution.
In order to provide for just and equitable contribution among
the Guarantors, the Guarantors agree, inter se, that in the event any payment or
distribution is made by any Guarantor (a "Funding Guarantor") under the
Guarantee, such Funding Guarantor shall be entitled to a contribution from all
other Guarantors in a pro rata amount based on the Adjusted Net Assets of each
Guarantor (including the Funding Guarantor) for all payments, damages and
expenses incurred by that Funding Guarantor in discharging the Company's
obligations with respect to any Securities or any other Guarantor's obligations
with respect to the Guarantee. "Adjusted Net Assets" of such Guarantor at any
date shall mean the lesser of the amount by which (x) the fair value of the
property of such Guarantor exceeds the total amount of liabilities, including,
without limitation, contingent liabilities (after giving effect to all other
fixed and contingent liabilities incurred or assumed on such date and after
giving effect to any collection from any other Subsidiary of the Guarantor in
respect of the obligations of its Guarantee), but excluding liabilities under
the Guarantee, of such Guarantor at such date and (y) the present fair salable
value of the assets of such Guarantor at such date exceeds the amount that will
be required to pay the probable liability of such Guarantor on its debts (after
giving effect to all other fixed and contingent liabilities incurred or assumed
on such date and after giving effect to any collection from any other Subsidiary
of the Company in respect of the obligations of such Guarantor under its
Guarantee), excluding debt in respect of the Guarantee of such Guarantor, as
they become absolute and matured.
Section 9.07. Waiver of Subrogation.
Until all guaranteed obligations under this Indenture and with
respect to all Securities of an applicable Series are paid in full, each
Guarantor hereby irrevocably waives any claim or other rights which it may now
or hereafter acquire against the Company that arise from the existence, payment,
performance or enforcement of such Guarantor's obligations under the Guarantee
and this Indenture, including, without limitation, any right of subrogation,
reimbursement, exoneration, indemnification, and any right to participate in any
claim or remedy of any Holder of Securities of the applicable Series against the
Company, whether or not such claim, remedy or right arises in equity, or under
contract, statute or common law, including, without limitation, the right to
take or receive from the Company, directly or indirectly, in cash or other
property or by set-off or in any other manner, payment or security on account of
such claim or other rights. If any amount shall be paid to any Guarantor in
violation of the preceding sentence and the Securities of the applicable Series
shall not have been paid in full, such amount shall have been deemed to have
been paid to such Guarantor for the benefit of, and held in trust for the
benefit of, the Holders of the Securities of the applicable Series, and shall
forthwith be paid to the Trustee for the benefit of such Holders to be credited
and applied upon the Securities of the applicable Series, whether matured or
unmatured, in accordance with the terms of this Indenture. Each Guarantor
acknowledges that it will receive direct and indirect benefits from the
financing arrangements contemplated by this Indenture and that the waiver set
forth in this Section 9.07 is knowingly made in contemplation of such benefits.
Section 9.08. Execution of Guarantee.
To evidence their guarantee to the Holders set forth in this
Article Nine, the Guarantors hereby agree to execute the Guarantee in
substantially the form included in Exhibit A or in any such other form set forth
in the Authorizing Resolution or supplemental indenture pertaining to the
applicable Series, which shall be endorsed on each Security ordered to be
authenticated and delivered by the Trustee. Each Guarantor hereby agrees that
its Guarantee set forth in this Article Nine shall remain in full force and
effect notwithstanding any fail ure to endorse on each Security a notation of
such Guarantee. Each such Guarantee shall be signed on behalf of each Guarantor
by two Officers, or an Officer and an Assistant Secretary or one Officer shall
sign and one Officer or an Assistant Secretary (each of whom shall, in each
case, have been duly authorized by all requisite corporate actions) shall attest
to such Guarantee prior to the authentication of the Security on which it is
endorsed, and the delivery of such Security by the Trustee, after the
authentication thereof hereunder, shall constitute due delivery of such
Guarantee on behalf of such Guarantor. Such signatures upon the Guarantee may be
by manual or facsimile signature of such officers and may be imprinted or
otherwise reproduced on the Guarantee, and in case any such officer who shall
have signed the Guarantee shall cease to be such officer before the Security on
which such Guarantee is endorsed shall have been authenticated and delivered by
the Trustee or disposed of by the Company, such Security nevertheless may be
authenticated and delivered or disposed of as though the person who signed the
Guarantee had not ceased to be such officer of the Guarantor.
ARTICLE TEN
Amendments, Supplements and Waivers
Section 10.01. Without Consent of Holders.
The Company, the Guarantors and the Trustee may amend or
supplement this Indenture or the Securities of a Series without notice to or
consent of any Securityholder of such Series:
(1) to cure any ambiguity, omission, defect or
inconsistency;
(2) to comply with Article Five;
(3) to provide that specific provisions of this Indenture
shall not apply to a Series not previously issued;
(4) to create a Series and establish its terms;
(5) to provide for uncertificated Securities in addition to
or in place of certificated Securities;
(6) to make any other change that does not adversely affect
the rights of Securityholders; and
(7) to remove a Guarantor in respect of any Series which, in
accordance with the terms of this Indenture applicable to the
particular Series, ceases to be liable in respect of its
Guarantee.
After an amendment under this Section 10.01 becomes effective,
the Company shall mail notice of such amendment to the Securityholders.
Section 10.02. With Consent of Holders.
The Company, the Guarantors and the Trustee may amend or
supplement this Indenture or the Securities of a Series without notice to any
Securityholder of such Series but with the written consent of the Holders of at
least a majority in principal amount of the outstanding Securities of each such
Series affected by the amendment. Each such Series shall vote as a separate
class. The Holders of a majority in principal amount of the outstanding
Securities of any Series may waive compliance by the Company with any provision
of the Securities of such Series or of this Indenture relating to such Series
without notice to any Securityholder. Without the consent of each Securityholder
of a Series affected, however, an amendment, supplement or waiver, including a
waiver pursuant to Section 6.04, may not:
(1) reduce the amount of Securities of such Series whose
Holders must consent to an amendment, supplement or waiver;
(2) reduce the rate of or change the time for payment of
interest, including defaulted interest, on any Security;
(3) reduce the principal of or change the fixed maturity of
any Security or alter the provisions (including related definitions) with
respect to redemption of Securities pursuant to Article Three hereof or with
respect to any obligations on the part of the Company to offer to purchase or to
redeem Securities of a Series pursuant to the Authorizing Resolution or
supplemental indenture pertaining to such Series;;
(4) modify the ranking or priority of the Securities of any
Series or the Guarantee thereof;
(5) release any Guarantor from any of its obligations under
its Guarantee or this Indenture otherwise than in accordance with the terms of
this Indenture;
(6) make any change in Sections 6.04, 6.07 or this 10.02;
(7) waive a continuing Default or Event of Default in the
payment of the principal of or interest on any Security; or
(8) make any Security payable at a place or in money other
than that stated in the Security, or impair the right of any Securityholder to
bring suit as permitted by Section 6.07.
An amendment of a provision included solely for the benefit of one or
more Series does not affect the interests of Securityholders of any other
Series.
It shall not be necessary for the consent of the Holders under this
Section to approve the particular form of any proposed supplement, but it shall
be sufficient if such consent approves the substance thereof.
Section 10.03. Compliance with Trust Indenture Act.
Every amendment to or supplement of this Indenture or the
Securities shall comply with the TIA as then in effect.
Section 10.04. Revocation and Effect of Consents.
A consent to an amendment, supplement or waiver by a Holder
shall bind the Holder and every subsequent Holder of a Security or portion of a
Security that evidences the same debt as the consenting Holder's Security, even
if notation of the consent is not made on any Security. Subject to the following
paragraph, any such Holder or subsequent Holder, however, may revoke the consent
as to his Security or portion of a Security. Such revocation shall be effective
only if the Trustee receives the notice of revocation before the date the
amendment, supplement or waiver becomes effective.
The Company may, but shall not be obligated to, fix a record
date for the purpose of determining the Holders of Securities of any Series
entitled to consent to any amendment, supplement or waiver, which record date
shall be at least 10 days prior to the first solicitation of such consent. If a
record date is fixed, then notwithstanding the last sentence of the immediately
preceding paragraph, those Persons who were Holders at such record date (or
their duly designated proxies), and only those Persons, shall be entitled to
revoke any consent previously given, whether or not such Persons continue to be
Holders after such record date. No such consent shall be valid or effective for
more than 90 days after such record date.
After an amendment, supplement or waiver becomes effective, it
shall bind every Holder, unless it makes a change described in any of clauses
(1) through (8) of Section 10.02, in which case, the amendment, supplement or
waiver shall bind only each Holder of a Security who has consented to it and
every subsequent Holder of a Security or portion of a Security that evidences
the same debt as the consenting Holder's Security; provided that any such waiver
shall not impair or affect the right of any Holder to receive payment of
principal of and interest on a Security, on or after the respective due dates
expressed in such Security, or to bring suit for the enforcement of any such
payment on or after such respective dates without the consent of such Holder.
Section 10.05. Notation on or Exchange of Securities.
If an amendment, supplement or waiver changes the terms of a
Security, the Company may require the Holder of the Security to deliver it to
the Trustee, at which time the Trustee shall place an appropriate notation on
the Security about the changed terms and return it to the Holder. Alternatively,
if the Company or the Trustee so determines, the Company in exchange for the
Security shall issue and the Trustee shall authenticate a new Security that
reflects the changed terms.
Section 10.06. Trustee to Sign Amendments, etc.
Subject to Section 7.02(b), the Trustee shall sign any
amendment, supplement or waiver authorized pursuant to this Article if the
amendment, supplement or waiver does not adversely affect the rights, duties,
liabilities or immunities of the Trustee. If it does, the Trustee may but need
not sign it. In signing or refusing to sign such amendment or supplemental
indenture, the Trustee shall be entitled to receive and shall be fully protected
in relying upon, an Officers' Certificate and an Opinion of Counsel as
conclusive evidence that such amendment or supplemental indenture is authorized
or permitted by this Indenture, that it is not inconsistent herewith, and that
it will be valid and binding upon the Company in accordance with its terms.
ARTICLE ELEVEN
Miscellaneous
Section 11.01. Trust Indenture Act Controls.
If any provision of this Indenture limits, qualifies or
conflicts with another provision which is required to be included in this
Indenture by the TIA, the required provision shall control.
Section 11.02. Notices.
Any order, consent, notice or communication shall be
sufficiently given if in writing and delivered in person or mailed by first
class mail, postage prepaid, addressed as follows:
if to the Company or to any Guarantor:
D.R. Horton, Inc.
1901 Ascension Blvd., Suite 100
Arlington, Texas 76006
Attention:
if to the Trustee:
Attention:
The Company or the Trustee by notice to the other may
designate additional or different addresses for subsequent notices or
communications.
Any notice or communication mailed to a Securityholder shall
be mailed to him by first class mail at his address as it appears on the
registration books of the Registrar and shall be sufficiently given to him if so
mailed within the time prescribed.
Failure to mail a notice or communication to a Securityholder
or any defect in it shall not affect its sufficiency with respect to other
Securityholders. If a notice or communi cation is mailed in the manner provided
above, it is duly given, whether or not the addressee receives it except that
notice to the Trustee shall only be effective upon receipt thereof by the
Trustee.
If the Company mails notice or communications to the
Securityholders, it shall mail a copy to the Trustee at the same time.
Section 11.03. Communications by Holders with
Other Holders.
Securityholders may communicate pursuant to TIA ss. 312(b)
with other Securityholders with respect to their rights under this Indenture or
the Securities. The Company, the Trustee, the Registrar and anyone else shall
have the protection of TIA ss. 312(c).
Section 11.04. Certificate and Opinion as to
Conditions Precedent.
Upon any request or application by the Company to the Trustee
to take any action under this Indenture, the Company shall furnish to the
Trustee:
(1) an Officers' Certificate (which shall include the
statements set forth in Section 11.05) stating that, in the opinion of the
signers, all conditions precedent, if any, provided for in this Indenture
relating to the proposed action have been complied with; and
(2) an Opinion of Counsel (which shall include the
statements set forth in Section 11.05) stating that, in the opinion of such
counsel, all such conditions precedent and covenants, compliance with which
constitutes a condition precedent, if any, provided for in this Indenture
relating to the proposed action or inaction, have been complied with and that
any such section does not conflict with the terms of the Indenture.
Section 11.05. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(1) a statement that the person making such certificate or
opinion has read such covenant or condition;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions contained in
such certificate or opinion are based;
(3) a statement that, in the opinion of such person, he has
made such examination or investigation as is necessary to enable him to express
an informed opinion as to whether or not such covenant or condition has been
complied with; and
(4) a statement as to whether or not, in the opinion of such
person, such condition or covenant has been complied with.
Section 11.06. Rules by Trustee and Agents.
The Trustee may make reasonable rules for action by or a
meeting of Securityholders. The Registrar or Paying Agent may make reasonable
rules for its functions.
Section 11.07. Legal Holidays.
A "Legal Holiday" is a Saturday, a Sunday, a legal holiday or
a day on which banking institutions in Fort Worth, Texas and New York, New York
are not required to be open. If a payment date is a Legal Holiday at a place of
payment, payment may be made at that place on the next succeeding day that is
not a Legal Holiday, and no interest shall accrue for the intervening period. A
Business Day is any day other than a Legal Holiday.
Section 11.08. Governing Law.
The laws of the State of New York shall govern this Indenture,
the Securities of each Series and the Guarantees.
Section 11.09. No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another indenture,
loan or debt agreement of the Company or a Subsidiary. Any such indenture, loan
or debt agreement may not be used to interpret this Indenture.
Section 11.10. No Recourse Against Others.
All liability described in paragraph 13 of the Securities of
any director, officer, employee or stockholder, as such, of the Company is
waived and released.
Section 11.11. Successors and Assigns.
All covenants and agreements of the Company in this Indenture
and the Securities shall bind its successors and assigns. All agreements of the
Trustee in this Indenture shall bind its successors and assigns.
Section 11.12. Duplicate Originals.
The parties may sign any number of copies of this Indenture.
Each signed copy shall be an original, but all of them together represent the
same agreement.
Section 11.13. Severability.
In case any one or more of the provisions contained in this
Indenture or in the Securities of a 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.
ARTICLE TWELVE
Subordination of Securities
Section 12.01. Securities Subordinated to Senior Indebtedness.
The Company covenants and agrees, and the Trustee and each
Holder of the Securities by his acceptance thereof likewise covenant and agree,
that all Securities shall be issued subject to the provisions of this Article
Twelve; and each person holding any Security, whether upon original issue or
upon transfer, assignment or exchange thereof, accepts and agrees that all
payments of the principal of and interest on the Securities by the Company
shall, to the extent and in the manner set forth in this Article Twelve, be
subordinated and junior in right of payment to the prior payment in full in cash
of all amounts payable under Senior Indebtedness.
Section 12.02. No Payment on Securities in Certain Circumstances.
(a) No direct or indirect payment (excluding any payment or
distribution of Permitted Junior Securities) by or on behalf of the Company of
principal of or interest on the Securities, except from those funds held in
trust for the benefit of Holders of any Securities pursuant to the procedures
set forth in Article Eight hereof, whether pursuant to the terms of the
Securities, upon acceleration or otherwise, shall be made if, at the time of
such payment, there exists a default in the payment of all or any portion of the
obligations on any Senior Indebtedness, whether at maturity, on account of
mandatory redemption or prepayment, acceleration or otherwise, and such default
shall not have been cured or waived or the benefits of this sentence waived by
or on behalf of the holders of such Senior Indebtedness. In addition, during the
continuance of any non-payment event of default with respect to any Designated
Senior Indebtedness pursuant to which the maturity thereof may be immediately
accelerated, and upon receipt by the Trustee of written notice (a "Payment
Blockage Notice" ) from the holder or holders of such Designated Senior
Indebtedness or the trustee or agent acting on behalf of such Designated Senior
Indebtedness, then, unless and until such event of default has been cured or
waived or has ceased to exist or such Designated Senior Indebtedness has been
discharged or repaid in full in cash or the benefits of these provisions have
been waived by the holders of such Designated Senior Indebtedness, no direct or
indirect payment (excluding any payment or distribution of Permitted Junior
Securities) shall be made by or on behalf of the Company of principal of or
interest on the Securities, except from those funds held in trust for the
benefit of Holders of any Securities pursuant to the procedures set forth in
Article Eight hereof, to such Holders, during a period (a "Payment Blockage
Period") commencing on the date of receipt of such notice by the Trustee and
ending 179 days thereafter.
Notwithstanding anything herein or in the Securities to the
contrary, (x) in no event shall a Payment Blockage Period extend beyond 179 days
from the date the Payment Blockage Notice in respect thereof was given, (y)
there shall be a period of at least 181 consecutive days in each 360-day period
when no Payment Blockage Period is in effect and (z) not more than one Payment
Blockage Period may be commenced with respect to the Securities during any
period of 360 consecutive days. No event of default that existed or was
continuing on the date of commencement of any Payment Blockage Period with
respect to the Designated Senior Indebtedness initiating such Payment Blockage
Period may be, or be made, the basis for the commencement of any other Payment
Blockage Period by the holder or holders of such Designated Senior Indebtedness
or the trustee or agent acting on behalf of such Designated Senior Indebtedness,
whether or not within a period of 360 consecutive days, unless such event of
default has been cured or waived for a period of not less than 90 consecutive
days.
(b) In the event that, notwithstanding the foregoing, any
payment shall be received by the Trustee or any Holder when such payment is
prohibited by Section 12.02(a), such payment shall be held in trust for the
benefit of, and shall be paid over or delivered to, the holders of Senior
Indebtedness (pro rata to such holders on the basis of the respective amounts of
Senior Indebtedness held by such holders) or their respective representatives,
or to the trustee or trustees under any indenture pursuant to which any of such
Senior Indebtedness may have been issued, as their respective interests may
appear, but only to the extent that, upon notice from the Trustee to the holders
of Senior Indebtedness that such prohibited payment has been made, the holders
of the Senior Indebtedness (or their representative or representatives or a
trustee) notify the Trustee in writing of the amounts then due and owing on the
Senior Indebtedness, if any, and only the amounts specified in such notice to
the Trustee shall be paid to the holders of Senior Indebtedness.
Section 12.03. Payment Over of Proceeds upon Dissolution, etc.
(a) Upon any payment or distribution of assets or securities
of the Company of any kind or character, whether in cash, property or securities
(excluding any payment or distribution of Permitted Junior Securities), upon any
dissolution or winding up or liquidation or reorganization of the Company,
whether voluntary or involuntary or in bankruptcy, insolvency, receivership or
other proceedings, all Senior Indebtedness shall first be paid in full in cash
before the Holders of the Securities or the Trustee on behalf of such Holders
shall be entitled to receive any payment by the Company of the principal of or
interest on the Securities, or any payment by the Company to acquire any of the
Securities for cash, property or securities, or any distribution with respect to
the Securities of any cash, property or securities (excluding any payment or
distribution of Permitted Junior Securities). Before any payment may be made by,
or on behalf of, the Company of the principal of or interest on the Securities
upon any such dissolution or winding up or liquidation or reorganization, any
payment or distribution of assets or securities of the Company of any kind or
character, whether in cash, property or securities (excluding any payment or
distribution of Permitted Junior Securities), to which the Holders of the
Securities or the Trustee on their behalf would be entitled, but for the
subordination provisions of this Indenture, shall be made by the Company or by
any receiver, trustee in bankruptcy, liquidation trustee, agent or other Person
making such payment or distribution, directly to the holders of the Senior
Indebtedness (pro rata to such holders on the basis of the respective amounts of
Senior Indebtedness held by such holders) or their representatives or to the
trustee or trustees or agent or agents under any agreement or indenture pursuant
to which any of such Senior Indebtedness may have been issued, as their
respective interests may appear, to the extent necessary to pay all such Senior
Indebtedness in full in cash after giving effect to any prior or concurrent
payment, distribution or provision therefor to or for the holders of such Senior
Indebtedness.
(b) In the event that, notwithstanding the foregoing provision
prohibiting such payment or distribution, any payment or distribution of assets
or securities of the Company of any kind or character, whether in cash, property
or securities (excluding any payment or distribution of Permitted Junior
Securities), shall be received by the Trustee or any Holder of Securities at a
time when such payment or distribution is prohibited by Section 12.03(a) and
before all obligations in respect of Senior Indebtedness are paid in full in
cash, or payment provided for, such payment or distribution shall be received
and held in trust for the benefit of, and shall be paid over or delivered to,
the holders of Senior Indebtedness (pro rata to such holders on the basis of the
respective amounts of Senior Indebtedness held by such holders) or their
respective representatives, or to the trustee or trustees or agent or agents
under any indenture pursuant to which any of such Senior Indebtedness may have
been issued, as their respective interests may appear, for application to the
payment of Senior Indebtedness remaining unpaid until all such Senior
Indebtedness has been paid in full in cash after giving effect to any prior or
concurrent payment, distribution or provision therefor to or for the holders of
such Senior Indebtedness.
The consolidation of the Company with, or the merger of the
Company with or into, another corporation or the liquidation or dissolution of
the Company following the conveyance or transfer of its property as an entirety,
or substantially as an entirety, to another corporation upon the terms and condi
tions provided in Article Five (or any replacement provisions as contemplated by
Article Five) shall not be deemed a dissolution, winding up, liquidation or
reorganization for the purposes of this Section 12.03 if such other corporation
shall, as a part of such consolidation, merger, conveyance or transfer, comply
with the conditions stated in Article Five (or any replacement provisions as
contemplated by Article Five).
Section 12.04. Subrogation.
Upon the payment in full of all Senior Indebtedness, or
provision for payment, the Holders of the Securities shall be subrogated to the
rights of the holders of Senior Indebtedness to receive payments or
distributions of cash, property or securities of the Company made on such Senior
Indebtedness until the principal of and interest on the Securities shall be paid
in full in cash; and, for the purposes of such subrogation, no payments or
distributions to the holders of the Senior Indebtedness of any cash, property or
securities to which the Holders of the Securities or the Trustee on their behalf
would be entitled except for the provisions of this Article Twelve, and no
payment over pursuant to the provisions of this Article Twelve to the holders of
Senior Indebtedness by Holders of the Securities or the Trustee on their behalf
shall, as between the Company, its creditors other than holders of Senior
Indebtedness, and the Holders of the Securities, be deemed to be a payment by
the Company to or on account of the Senior Indebtedness. It is understood that
the provisions of this Article Twelve are and are intended solely for the
purpose of defining the relative rights of the Holders of the Securities, on the
one hand, and the holders of the Senior Indebtedness, on the other hand.
If any payment or distribution to which the Holders of the
Securities would otherwise have been entitled but for the provisions of this
Article Twelve shall have been applied, pursuant to the provisions of this
Article Twelve, to the payment of all amounts payable under Senior Indebtedness,
then and in such case, the Holders of the Securities shall be entitled to
receive from the holders of such Senior Indebtedness any payments or
distributions received by such holders of Senior Indebtedness in excess of the
amount required to make payment in full, or provision for payment, of such
Senior Indebtedness.
Section 12.05. Obligations of Company Unconditional.
Nothing contained in this Article Twelve or elsewhere in this
Indenture or in the Securities is intended to or shall impair, as among the
Company and the Holders of the Securities, the obligation of the Company, which
is absolute and unconditional, to pay to the Holders of the Securities the
principal of and interest on the Securities as and when the same shall become
due and payable in accordance with their terms, or is intended to or shall
affect the relative rights of the Holders of the Securities and creditors of the
Company other than the holders of the Senior Indebtedness, nor shall anything
herein or therein prevent the Holder of any Security or the Trustee on their
behalf from exercising all remedies otherwise permitted by applicable law upon
default under this Indenture, subject to the rights, if any, under this Article
Twelve of the holders of the Senior Indebtedness in respect of cash, property or
securities of the Company received upon the exercise of any such remedy.
Without limiting the generality of the foregoing, nothing
contained in this Article Twelve shall restrict the right of the Trustee or the
Holders of Securities to take any action to declare the Securities to be due and
payable prior to their stated maturity pursuant to Section 6.01 or to pursue any
rights or remedies hereunder; provided, however, that all Senior Indebtedness
then due and payable shall first be paid in full before the Holders of the
Securities or the Trustee are entitled to receive any direct or indirect payment
from the Company of principal of or interest on the Securities.
Section 12.06. Notice to Trustee.
The Company shall give prompt written notice to the Trustee of
any fact known to the Company which would prohibit the making of any payment to
or by the Trustee in respect of the Securities pursuant to the provisions of
this Article Twelve. The Trustee shall not be charged with knowledge of the
existence of any event of default with respect to any Senior Indebtedness or of
any other facts which would prohibit the making of any payment to or by the
Trustee unless and until the Trustee shall have received notice in writing at
its corporate trust office to that effect signed by an Officer of the Company,
or by a holder of Senior Indebtedness or trustee or agent therefor; and prior to
the receipt of any such written notice, the Trustee shall, subject to Article
Seven, be entitled to assume that no such facts exist; provided that if the
Trustee shall not have received the notice provided for in this Section 12.06 at
least two Business Days prior to the date upon which by the terms of this
Indenture any moneys shall become payable for any purpose (including, without
limitation, the payment of the principal of or interest on any Security), then,
regardless of anything herein to the contrary, the Trustee shall have full power
and authority to receive any moneys from the Company and to apply the same to
the purpose for which they were received, and shall not be affected by any
notice to the contrary which may be received by it on or after such prior date.
Nothing contained in this Section 12.06 shall limit the right of the holders of
Senior Indebtedness to recover payments as contemplated by Section 12.03. The
Trustee shall be entitled to rely on the delivery to it of a written notice by a
Person representing himself or itself to be a holder of any Senior Indebtedness
(or a trustee on behalf of, or other representative of, such holder) to
establish that such notice has been given by a holder of such Senior
Indebtedness or a trustee or representative on behalf of any such holder.
In the event that the Trustee determines in good faith that
any evidence is required with respect to the right of any Person as a holder of
Senior Indebtedness to participate in any payment or distribution pursuant to
this Article Twelve, the Trustee may request such Person to furnish evidence to
the reasonable satisfaction of the Trustee as to the amount of Senior
Indebtedness held by such Person, the extent to which such Person is entitled to
participate in such payment or distribution and any other facts pertinent to the
rights of such Person under this Article Twelve, and if such evidence is not
furnished, the Trustee may defer any payment to such Person pending judicial
determination as to the right of such Person to receive such payment.
Section 12.07. Reliance on Judicial Order or Certificate
of Liquidating Agent.
Upon any payment or distribution of assets or securities
referred to in this Article Twelve, the Trustee and the Holders of the
Securities shall be entitled to rely upon any order or decree made by any court
of competent jurisdiction in which bankruptcy, dissolution, winding-up,
liquidation or reorganization proceedings are pending, or upon a certificate of
the receiver, trustee in bankruptcy, liquidating trustee, agent or other person
making such payment or distribution, delivered to the Trustee or to the Holders
of the Securities for the purpose of ascertaining the persons entitled to
participate in such distribution, the holders of the Senior Indebtedness and
other indebtedness of the Company, the amount thereof or payable thereon, the
amount or amounts paid or distributed thereon and all other facts pertinent
thereto or to this Article Twelve.
Section 12.08. Trustee's Relation to Senior Indebtedness.
The Trustee and any Paying Agent shall be entitled to all the
rights set forth in this Article Twelve with respect to any Senior Indebtedness
which may at any time be held by it in its individual or any other capacity to
the same extent as any other holder of Senior Indebtedness, and nothing in this
Indenture shall deprive the Trustee or any Paying Agent of any of its rights as
such holder.
With respect to the holders of Senior Indebtedness, the
Trustee undertakes to perform or to observe only such of its covenants and
obligations as are specifically set forth in this Article Twelve, and no implied
covenants or obligations with respect to the holders of Senior Indebtedness
shall be read into this Indenture against the Trustee. The Trustee shall not be
deemed to owe any fiduciary duty to the holders of Senior Indebtedness (except
as provided in Section 12.03(b)). The Trustee shall not be liable to any such
holders if the Trustee shall in good faith mistakenly pay over or distribute to
Holders of Securities or to the Company or to any other person cash, property or
securities to which any holders of Senior Indebtedness shall be entitled by
virtue of this Article Twelve or otherwise.
Section 12.09. Subordination Rights Not Impaired by Acts
or Omissions of the Company or Holders
of Senior Indebtedness.
No right of any present or future holders of any Senior
Indebtedness to enforce subordination as provided herein shall at any time in
any way be prejudiced or impaired by any act or failure to act on the part of
the Company or by any act or failure to act, in good faith, by any such holder,
or by any noncompliance by the Company with the terms of this Indenture,
regardless of any knowledge thereof which any such holder may have or otherwise
be charged with. The provisions of this Article Twelve are intended to be for
the benefit of, and shall be enforceable directly by, the holders of Senior
Indebtedness.
Section 12.10. Securityholders Authorize Trustee To
Effectuate Subordination of Securities.
Each Holder of Securities by his acceptance of such Securities
authorizes and expressly directs the Trustee on his behalf to take such action
as may be necessary or appropriate to effectuate the subordination provided in
this Article Twelve, and appoints the Trustee his attorney-in-fact for such
purposes, including, in the event of any dissolution, winding-up, liquidation or
reorganization of the Company (whether in bankruptcy, insolvency, receivership,
reorganization or similar proceedings or upon an assignment for the benefit of
creditors or otherwise) tending towards liquidation of the business and assets
of the Company, the filing of a claim for the unpaid balance of its or his
Securities in the form required in those proceedings.
Section 12.11. This Article Not to Prevent Events of Default.
The failure to make a payment on account of principal of or
interest on the Securities by reason of any provision of this Article Twelve
shall not be construed as preventing the occurrence of an Event of Default
specified in clause (1) or (2) of Section 6.01.
Section 12.12. Trustee's Compensation Not Prejudiced.
Nothing in this Article Twelve shall apply to amounts due to
the Trustee pursuant to other sections in this Indenture.
Section 12.13. No Waiver of Subordination Provisions.
Without in any way limiting the generality of Section 12.09,
the holders of Senior Indebtedness may, at any time and from time to time,
without the consent of or notice to the Trustee or the Holders of the
Securities, without incurring responsibility to the Holders of the Securities
and without impairing or releasing the subordination provided in this Article
Twelve or the obligations hereunder of the Holders of the Securities to the
holders of Senior Indebtedness, do any one or more of the following: a) change
the manner, place or terms of payment or extend the time of payment of, or renew
or alter, Senior Indebtedness or any instrument evidencing the same or any
agreement under which Senior Indebtedness is outstanding or secured; (b) sell,
exchange, release or otherwise deal with any property pledged, mortgaged or
otherwise securing Senior Indebtedness; (c) release any Person liable in any
manner for the collection of Senior Indebtedness; and (d) exercise or refrain
from exercising any rights against the Company and any other Person.
Section 12.14. Certain Payments May Be Paid Prior to Dissolution.
All money and United States government obligations properly
deposited in trust with the Trustee pursuant to and in accordance with Article
Eight shall be for the sole benefit of the Holders and shall not be subject to
this Article Twelve.
Nothing contained in this Article Twelve or elsewhere in this
Indenture shall prevent (i) the Company, except under the conditions described
in Section 12.02, from making payments of principal of and interest on the
Securities, or from depositing with the Trustee any moneys for such payments or
from effecting a termination of the Company's and the Guarantors' obligations
under the Securities and this Indenture as provided in Article Eight, or (ii)
the application by the Trustee of any moneys deposited with it for the purpose
of making such payments of principal of on and interest on the Securities to the
holders entitled thereto unless at least two Business Days prior to the date
upon which such payment becomes due and payable, the Trustee shall have received
the written notice provided for in Section 12.02(b) or in Section 12.06. The
Company shall give prompt written notice to the Trustee of any dissolution,
winding up, liquidation or reorganization of the Company.
ARTICLE THIRTEEN
Subordination of Guarantee
Section 13.01. Guarantee Obligations Subordinated to
Guarantor Senior Indebtedness.
Each Guarantor covenants and agrees, and the Trustee and each
Holder of the Securities by his acceptance thereof likewise covenant and agree,
that the Guarantee of such Guarantor shall be issued subject to the provisions
of this Article Thirteen; and each person holding any Security, whether upon
original issue or upon transfer, assignment or exchange thereof, accepts and
agrees that all payments of the principal of and interest on the Securities
pursuant to the Guarantee made by or on behalf of any Guarantor shall, to the
extent and in the manner set forth in this Article Thirteen, be subordinated and
junior in right of payment to the prior payment in full in cash of all amounts
payable under Guarantor Senior Indebtedness of such Guarantor.
Section 13.02. No Payment on Guarantees in Certain Circumstances.
(a) No direct or indirect payment (excluding any payment or
distribution of Permitted Junior Securities) by or on behalf of any Guarantor of
principal of or interest on the Securities, except from those funds held in
trust for the benefit of Holders of any Securities pursuant to the procedures
set forth in Article Eight hereof, pursuant to such Guarantor's Guarantee,
whether pursuant to the terms of the Securities, upon acceleration or otherwise,
shall be made if, at the time of such payment, there exists a default in the
payment of all or any portion of the obligations on any Guarantor Senior
Indebtedness of such Guarantor, whether at maturity, on account of mandatory
redemption or prepayment, acceleration or otherwise, and such default shall not
have been cured or waived or the benefits of this sentence waived by or on
behalf of the holders of such Guarantor Senior Indebtedness. In addition, during
the continuance of any non-payment event of default with respect to any
Designated Guarantor Senior Indebtedness pursuant to which the maturity thereof
may be immediately accelerated, and upon receipt by the Trustee of written
notice (the "Guarantor Payment Blockage Notice") from the holder or holders of
such Designated Guarantor Senior Indebtedness or the trustee or agent acting on
behalf of such Designated Guarantor Senior Indebtedness, then, unless and until
such event of default has been cured or waived or has ceased to exist or such
Designated Guarantor Senior Indebtedness has been discharged or paid in full in
cash or the benefits of these provisions have been waived by the holders of such
Designated Guarantor Senior Indebtedness, no direct or indirect payment
(excluding any payment or distribution of Permitted Junior Securities) shall be
made by or on behalf of such Guarantor of principal or interest on the
Securities, except from those funds held in trust for the benefit of the Holders
of any Securities pursuant to the procedures set forth in Article Eight hereof
to such Holders, during a period (a "Guarantor Blockage Period") commencing on
the date of receipt of such notice by the Trustee and ending 179 days
thereafter.
Notwithstanding anything herein or in the Securities to the
contrary, (x) in no event shall a Guarantor Blockage Period extend beyond 179
days from the date the Guarantor Payment Blockage Notice in respect thereof was
given, (y) there shall be a period of at least 181 consecutive days in each
360-day period when no Guarantor Blockage Period is in effect and (z) not more
than one Guarantor Blockage Period may be commenced with respect to any
Guarantor during any period of 360 consecu tive days. No event of default that
existed or was continuing on the date of commencement of any other Guarantor
Blockage Period with respect to the Designated Guarantor Senior Indebtedness
initiating such Guarantor Blockage Period may be, or be made, the basis for the
commencement of any other Guarantor Blockage Period by the holder or holders of
such Designated Guarantor Senior Indebtedness or the trustee or agent acting on
behalf of such Designated Guarantor Senior Indebtedness, whether or not within a
period of 360 consecutive days, unless such event of default has been cured or
waived for a period of not less than 90 consecutive days.
(b) In the event that, notwithstanding the foregoing, any
payment shall be received by the Trustee or any Holder when such payment is
prohibited by Section 13.02(a), such payment shall be held in trust for the
benefit of, and shall be paid over or delivered to, the holders of such
Guarantor Senior Indebtedness (pro rata to such holders on the basis of the
respective amounts of Senior Indebtedness held by such holders) or their
respective representatives, or to the trustee or trustees under any indenture
pursuant to which any of such Guarantor Senior Indebtedness may have been
issued, as their respective interests may appear, but only to the extent that,
upon notice from the Trustee to the holders of such Guarantor Senior
Indebtedness that such prohibited payment has been made, the holders of such
Guarantor Senior Indebtedness (or their representative or representatives or a
trustee) notify the Trustee in writing of the amounts then due and owing on such
Guarantor Senior Indebtedness, if any, and only the amounts specified in such
notice to the Trustee shall be paid to the holders of such Guarantor Senior
Indebtedness.
Section 13.03. Payment Over of Proceeds upon Dissolution, etc.
(a) Upon any payment or distribution of assets or securities
of any Guarantor of any kind or character, whether in cash, property or
securities (excluding any payment or distribution of Permitted Junior
Securities), upon any dissolution or winding-up or liquidation or reorganization
of such Guarantor, whether voluntary or involuntary or in bankruptcy,
insolvency, receivership or other proceedings, all Guarantor Senior Indebtedness
of such Guarantor shall first be paid in full before the Holders of the
Securities or the Trustee on behalf of such Holders shall be entitled to receive
any payment by such Guarantor of the principal of or interest on the Securities
pursuant to such Guarantor's Guarantee, or any payment to acquire any of the
Securities for cash, property or securities, or any distribution with respect to
the Securities of any cash, property or securities (excluding any payment or
distribution of Permitted Junior Securities). Before any payment may be made by,
or on behalf of, any Guarantor of the principal of or interest on the Securities
upon any such dissolution or winding-up or liquidation or reorganization, any
payment or distribution of assets or securities of such Guarantor of any kind or
character, whether in cash, property or securities (excluding any payment or
distribution of Permitted Junior Securities), to which the Holders of the
Securities or the Trustee on their behalf would be entitled, but for the
subordination provisions of this Indenture, shall be made by such Guarantor or
by any receiver, trustee in bankruptcy, liquidating trustee, agent or other
Person making such payment or distribution, directly to the holders of the
Guarantor Senior Indebtedness of such Guarantor (pro rata to such holders on the
basis of the respective amounts of such Guarantor Senior Indebtedness held by
such holders) or their representatives or to the trustee or trustees or agent or
agents under any agreement or indenture pursuant to which any of such Guarantor
Senior Indebtedness may have been issued, as their respective interests may
appear, to the extent necessary to pay all such Guarantor Senior Indebtedness in
full in cash after giving effect to any prior or concurrent payment,
distribution or provision therefor to or for the holders of such Guarantor
Senior Indebtedness.
(b) In the event that, notwithstanding the foregoing provision
prohibiting such payment or distribution, any payment or distribution of assets
or securities of any Guarantor of any kind or character, whether in cash,
property or securities (excluding any payment or distribution of Permitted
Junior Securities), shall be received by the Trustee or any Holder of Securities
at a time when such payment or distribution is prohibited by Section 13.03(a)
and before all obligations in respect of the Guarantor Senior Indebtedness of
such Guarantor are paid in full in cash, or payment provided for, such payment
or distribution shall be received and held in trust for the benefit of, and
shall be paid over or delivered to, the holders of such Guarantor Senior
Indebtedness (pro rata to such holders on the basis of the respective amounts of
such Guarantor Senior Indebtedness held by such holders) or their respective
representatives, or to the trustee or trustees or agent or agents under any
indenture pursuant to which any of such Guarantor Senior Indebtedness may have
been issued, as their respective interests may appear, for application to the
payment of such Guarantor Senior Indebtedness remaining unpaid until all such
Guarantor Senior Indebtedness has been paid in full in cash after giving effect
to any prior or concurrent payment, distribu tion or provision therefor to or
for the holders of such Guarantor Senior Indebtedness.
The consolidation of any Guarantor with, or the merger of any
Guarantor with or into, another corporation or the liquidation or dissolution of
any Guarantor following the conveyance or transfer of its property as an
entirety, or substantially as an entirety, to another corporation upon the terms
and conditions provided in Article Five (or any replacement provisions as
contemplated by Article Five) shall not be deemed a dissolution, winding-up,
liquidation or reorganization for the purposes of this Section 13.03 if such
other corporation shall, as a part of such consolidation, merger, conveyance or
transfer, comply with the conditions stated in Article Five (or any replacement
provisions as contemplated by Article Five).
Section 13.04. Subrogation.
Upon the payment in full of all Guarantor Senior Indebtedness
of a Guarantor, or provision for payment, the Holders of the Securities shall be
subrogated to the rights of the holders of such Guarantor Senior Indebtedness to
receive payments or distributions of cash, property or securities of such
Guarantor made on such Guarantor Senior Indebtedness until the principal of and
interest on the Securities shall be paid in full in cash; and, for the purposes
of such subrogation, no payments or distributions to the holders of such
Guarantor Senior Indebtedness of any cash, property or securities to which the
Holders of the Securities or the Trustee on their behalf would be entitled
except for the provisions of this Article Thirteen, and no payment over pursuant
to the provisions of this Article Thirteen to the holders of such Guarantor
Senior Indebtedness by Holders of the Securities or the Trustee on their behalf
shall, as between such Guarantor, its creditors other than holders of such
Guarantor Senior Indebtedness, and the Holders of the Securities, be deemed to
be a payment by such Guarantor to or on account of such Guarantor Senior
Indebtedness. It is understood that the provisions of this Article Thirteen are
and are intended solely for the purpose of defining the relative rights of the
Holders of the Securities, on the one hand, and the holders of Guarantor Senior
Indebtedness of each Guarantor, on the other hand.
If any payment or distribution to which the Holders of the
Securities would otherwise have been entitled but for the provisions of this
Article Thirteen shall have been applied, pursuant to the provisions of this
Article Thirteen, to the payment of all amounts payable under Guarantor Senior
Indebtedness, then and in such case, the Holders of the Securities shall be
entitled to receive from the holders of such Guarantor Senior Indebtedness any
payments or distributions received by such holders of Guarantor Senior
Indebtedness in excess of the amount required to make payment in full, or
provision for payment, of such Guarantor Senior Indebtedness.
Section 13.05. Obligations of Guarantors Unconditional.
Nothing contained in this Article Thirteen or elsewhere in
this Indenture or in the Securities or the Guarantees is intended to or shall
impair, as among the Guarantors and the Holders of the Securities, the
obligation of each Guarantor, which is absolute and unconditional, to pay to the
Holders of the Securities the principal of and interest on the Securities as and
when the same shall become due and payable in accordance with the terms of the
Guarantee of such Guarantor, or is intended to or shall affect the relative
rights of the Holders of the Securities and creditors of any Guarantor other
than the holders of Guarantor Senior Indebtedness of such Guarantor, nor shall
anything herein or therein prevent the Holder of any Security or the Trustee on
their behalf from exercising all remedies otherwise permitted by applicable law
upon default under this Indenture, subject to the rights, if any, under this
Article Thirteen of the holders of Guarantor Senior Indebtedness in respect of
cash, property or securities of any Guarantor received upon the exercise of any
such remedy.
Without limiting the generality of the foregoing, nothing
contained in this Article Thirteen shall restrict the right of the Trustee or
the Holders of Securities to take any action to declare the Securities to be due
and payable prior to their stated maturity pursuant to Section 6.01 or to pursue
any rights or remedies hereunder; provided, however, that all Guarantor Senior
Indebtedness of any Guarantor then due and payable shall first be paid in full
before the Holders of the Securities or the Trustee are entitled to receive any
direct or indirect payment from such Guarantor of principal of or interest on
the Securities pursuant to such Guarantor's Guarantee.
Section 13.06. Notice to Trustee.
The Company and each Guarantor shall give prompt written
notice to the Trustee of any fact known to the Company or such Guarantor which
would prohibit the making of any payment to or by the Trustee in respect of the
Securities pursuant to the provisions of this Article Thirteen. The Trustee
shall not be charged with knowledge of the existence of any event of default
with respect to any Guarantor Senior Indebtedness or of any other facts which
would prohibit the making of any payment to or by the Trustee unless and until
the Trustee shall have received notice in writing at its corporate trust office
to that effect signed by an Officer of the Company or such Guarantor, or by a
holder of Guarantor Senior Indebtedness or trustee or agent therefor; and prior
to the receipt of any such written notice, the Trustee shall, subject to Article
Seven, be entitled to assume that no such facts exist; provided that if the
Trustee shall not have received the notice provided for in this Section 13.06 at
least two Business Days prior to the date upon which by the terms of this
Indenture any moneys shall become payable for any purpose (including, without
limitation, the payment of the principal of or interest on any Security), then,
regardless of anything herein to the contrary, the Trustee shall have full power
and authority to receive any moneys from any Guarantor and to apply the same to
the purpose for which they were received, and shall not be affected by any
notice to the contrary which may be received by it on or after such prior date.
Nothing contained in this Section 13.06 shall limit the right of the holders of
Guarantor Senior Indebtedness to recover payments as contemplated by Section
13.03. The Trustee shall be entitled to rely on the delivery to it of a written
notice by a Person representing himself or itself to be a holder of any
Guarantor Senior Indebtedness (or a trustee on behalf of, or other
representative of, such holder) to establish that such notice has been given by
a holder of such Guarantor Senior Indebtedness or a trustee or representative on
behalf of any such holder.
In the event that the Trustee determines in good faith that
any evidence is required with respect to the right of any Person as a holder of
Guarantor Senior Indebtedness to participate in any payment or distribution
pursuant to this Article Thirteen, the Trustee may request such Person to
furnish evidence to the reasonable satisfaction of the Trustee as to the amount
of Guarantor Senior Indebtedness held by such Person, the extent to which such
Person is entitled to participate in such payment or distribution and any other
facts pertinent to the rights of such Person under this Article Thirteen, and if
such evidence is not furnished, the Trustee may defer any payment to such Person
pending judicial determination as to the right of such Person to receive such
payment.
Section 13.07. Reliance on Judicial Order or Certificate
of Liquidating Agent.
Upon any payment or distribution of assets or securities of a
Guarantor referred to in this Article Thirteen, the Trustee and the Holders of
the Securities shall be entitled to rely upon any order or decree made by any
court of competent jurisdiction in which bankruptcy, dissolution, winding-up,
liquidation or reorganization proceedings are pending, or upon a certificate of
the receiver, trustee in bankruptcy, liquidating trustee, agent or other person
making such payment or distribution, delivered to the Trustee or to the Holders
of the Securities for the purpose of ascertaining the persons entitled to
participate in such distribution, the holders of Guarantor Senior Indebtedness
of such Guarantor and other indebtedness of such Guarantor, the amount thereof
or payable thereon, the amount or amounts paid or distributed thereon and all
other facts pertinent thereto or to this Article Thirteen.
Section 13.08. Trustee's Relation to Guarantor Senior Indebtedness.
The Trustee and any Paying Agent shall be entitled to all the
rights set forth in this Article Thirteen with respect to any Guarantor Senior
Indebtedness which may at any time be held by it in its individual or any other
capacity to the same extent as any other holder of Guarantor Senior
Indebtedness, and nothing in this Indenture shall deprive the Trustee or any
Paying Agent of any of its rights as such holder.
With respect to the holders of Guarantor Senior Indebtedness,
the Trustee undertakes to perform or to observe only such of its covenants and
obligations as are specifically set forth in this Article Thirteen, and no
implied covenants or obligations with respect to the holders of Guarantor Senior
Indebtedness shall be read into this Indenture against the Trustee. The Trustee
shall not be deemed to owe any fiduciary duty to the holders of Guarantor Senior
Indebtedness (except as provided in Section 13.03(b)). The Trustee shall not be
liable to any such holders if the Trustee shall in good faith mistakenly pay
over or distribute to Holders of Securities or to the Company or to any other
person cash, property or securities to which any holders of Guarantor Senior
Indebtedness shall be entitled by virtue of this Article Thirteen or otherwise.
Section 13.09. Subordination Rights Not Impaired by Acts or
Omissions of the Guarantors or Holders
of Guarantor Senior Indebtedness.
No right of any present or future holders of any Guarantor
Senior Indebtedness to enforce subordination as provided herein shall at any
time in any way be prejudiced or impaired by any act or failure to act on the
part of any Guarantor or by any act or failure to act, in good faith, by any
such holder, or by any noncompliance by any Guarantor with the terms of this
Indenture, regardless of any knowledge thereof which any such holder may have or
otherwise be charged with. The provisions of this Article Thirteen are intended
to be for the benefit of, and shall be enforceable directly by, the holders of
Guarantor Senior Indebtedness.
Section 13.10. Securityholders Authorize Trustee
to Effectuate Subordination of Guarantee.
Each Holder of Securities by his acceptance of such Securities
authorizes and expressly directs the Trustee on his behalf to take such action
as may be necessary or appropriate to effectuate the subordination provided in
this Article Thirteen, and appoints the Trustee his attorney-in-fact for such
purposes, including, in the event of any dissolution, winding-up, liquidation or
reorganization of any Guarantor (whether in bankruptcy, insolvency,
receivership, reorganization or similar proceedings or upon an assignment for
the benefit of creditors or otherwise) tending towards liquidation of the
business and assets of such Guarantor, the filing of a claim for the unpaid
balance of its or his Securities in the form required in those proceedings.
Section 13.11. This Article Not to Prevent Events of Default.
The failure to make a payment on account of principal of or
interest on the Securities by reason of any provision of this Article Thirteen
shall not be construed as preventing the occurrence of an Event of Default
specified in clauses (1) or (2) of Section 6.01.
Section 13.12. Trustee's Compensation Not Prejudiced.
Nothing in this Article Thirteen shall apply to amounts due to
the Trustee pursuant to other Sections in this Indenture.
Section 13.13. No Waiver of Guarantee Subordination Provisions.
Without in any way limiting the generality of Section 13.09,
the holders of Guarantor Senior Indebtedness may, at any time and from time to
time, without the consent of or notice to the Trustee or the Holders of the
Securities, without incurring responsibility to the Holders of the Securities
and without impairing or releasing the subordination provided in this Article
Thirteen or the obligations hereunder of the Holders of the Securities to the
holders of Guarantor Senior Indebtedness, do any one or more of the following:
(a) change the manner, place or terms of payment or extend the time of payment
of, or renew or alter, Guarantor Senior Indebtedness or any instrument
evidencing the same or any agreement under which Guarantor Senior Indebtedness
is outstanding or secured; (b) sell, exchange, release or otherwise deal with
any property pledged, mortgaged or otherwise securing Guarantor Senior
Indebtedness; (c) release any Person liable in any manner for the collection of
Guarantor Senior Indebtedness; and (d) exercise or refrain from exercising any
rights against any Guarantor and any other Person.
Section 13.14. Certain Payments May Be Paid Prior to Dissolution.
Nothing contained in this Article Thirteen or elsewhere in
this Indenture shall prevent (i) a Guarantor, except under the conditions
described in Section 13.02, from making payments of principal of and interest on
the Securities, or from depositing with the Trustee any moneys for such
payments, or (ii) the application by the Trustee of any moneys deposited with it
for the purpose of making such payments of principal of and interest on the
Securities, to the holders entitled thereto unless at least two Business Days
prior to the date upon which such payment becomes due and payable, the Trustee
shall have received the written notice provided for in Section 13.02(b) or in
Section 13.06. A Guarantor shall give prompt written notice to the Trustee of
any dissolution, winding up, liquidation or reorganization of such Guarantor.
<PAGE>
SIGNATURES
IN WITNESS WHEREOF, the parties have caused this Indenture to
be duly executed, all as of the date first above written.
Dated: , 1997 D.R. HORTON, INC.
By:
Name:
Title:
Dated: , 1997 [List of Guarantors]
By:
Name:
Title:
Dated: , 1997 _______________, as Trustee
By:
Name:
Title:
(SEAL)
<PAGE>
EXHIBIT A
No. CUSIP No.: _______
[Title of Security]
D.R. HORTON, INC.
a Delaware corporation
promises to pay to
or registered assigns
the principal sum of [Dollars]1 on
[Title of Security]
Interest Payment, Dates: and
Record Dates: and
Authenticated: Dated:
D.R. Horton, Inc.
(Seal)
By__________________
Title:
By__________________
Title:
, as Trustee, certifies
that this is one of the Securities referred
to in the within mentioned Indenture.
By:________________________
Authorized Signatory
- --------
1 Or other currency. Insert corresponding provisions on reverse side of Security
in respect of foreign currency denomination or interest payment requirement.
<PAGE>
D.R. HORTON, INC.
[Title of Security]
1. Interest.
D.R. HORTON, INC. (the "Company"), a Delaware corporation,
promises to pay interest on the principal amount of this Security at the rate
per annum shown above. The Company will pay interest semiannually on
__________________ and ______________ of each year until the principal is paid
or made available for payment. Interest on the Securities will accrue from the
most recent date to which interest has been paid or duly provided for or, if no
interest has been paid, from _______________, 19 , provided that, if there is no
existing default in the payment of interest, and if this Security is
authenticated between a record date referred to on the face hereof and the next
succeeding interest payment date, interest shall accrue from such interest
payment date. Interest will be computed on the basis of a 360-day year of
twelve 30-day months.
2. Method of Payment. The Company will pay interest on the Securities (except
defaulted interest, if any, which will be paid on such special payment date to
Holders of record on such special record date as may be fixed by the Company) to
the persons who are registered Holders of Securities at the close of business on
the [Insert record dates]. Holders must surrender Securities to a Paying Agent
to collect principal payments. The Company will pay principal and interest in
money of the United States that at the time of payment is legal tender for
payment of public and private debts.
3. Paying Agent and Registrar.
Initially, _________________________ (the "Trustee") will act
as Paying Agent and Registrar. The Company may change or appoint any Paying
Agent, Registrar or co-Registrar without notice. The Company or any of its
Subsidiaries may act as Paying Agent, Registrar or co-Registrar.
4. Indenture.
The Company issued the Securities under an Indenture dated as
of ______________, 1997 ("Indenture") among the Com pany, the Guarantors and the
Trustee. The terms of the Securities and the Guarantees include those stated in
the Indenture (including those terms set forth in the Authorizing Resolution or
supplemental indenture pertaining to the Securities of the Series of which this
Security is a part) and those made part of the Indenture by reference to the
Trust Indenture Act of 1939 ("TIA") as in effect on the date of the Indenture.
The Securities and the Guarantees are subject to all such terms, and
Securityholders are referred to the Indenture and the Act for a statement of
them.
The Company will furnish to any Securityholder upon written
request and without charge a copy of the Indenture and the applicable
Authorizing Resolution or supplemental indenture. Requests may be made to: D.R.
Horton, Inc., 1901 Ascension Blvd., Suite 100, Arlington, Texas 76006,
Attention: ___________.
5. Optional Redemption.1
The Company may redeem the Securities at any time on or after
______________, ____, in whole or in part, at the following redemption prices
(expressed as a percentage of their principal amount) together with interest
accrued and unpaid to the date fixed for redemption:
If redeemed during the
Twelve-Month period
commencing on ___________ and
ending on ___________ in each
of the following years Percentage
- -------------------
1 If applicable
[Insert provisions relating to redemption at option of
Holders, if any]
Notice of redemption will be mailed at least 30 days but not
more than 60 days before the redemption date to each Holder of Securities to be
redeemed at his registered address. Securities in denominations larger than
$1,000 may be redeemed in part. On and after the redemption date interest ceases
to accrue on Securities or portions of them called for redemption, provided that
if the Company shall default in the payment of such Security at the redemption
price together with accrued interest, interest shall continue to accrue at the
rate borne by the Securities.
6. Mandatory Redemption.1
The Company shall redeem % of the aggregate principal
amount of Securities originally issued under the Indenture on each of , which
redemptions are calculated to retire % of the Securities originally issued prior
to maturity. Such redemptions shall be made at a redemption price equal to 100%
of the principal amount thereof, together with accrued interest to the
redemption date. The Company may reduce the principal amount of Securities to be
redeemed pursuant to this Paragraph 6 by the principal amount of any Securities
previously redeemed, retired or acquired, otherwise than pursuant to this
Paragraph 6, that the Company has delivered to the Trustee for cancellation and
not previously credited to the Company's obligations under this Paragraph 6.
Each such Security shall be received and credited for such purpose by the
Trustee at the redemption price and the amount of such mandatory redemption
payment shall be reduced accordingly.
7. Denominations, Transfer, Exchange.
The Securities are in registered form without coupons in
denominations of $1,000 and integral multiples of $1,000. A Holder may transfer
or exchange Securities by presentation of such Securities to the Registrar or a
co-Registrar with a request to register the transfer or to exchange them for an
- ----------------------
1 If applicable. Insert different or additional denomination and multiples.
equal principal amount of Securities of other denominations. The Registrar may
require a Holder, among other things, to furnish appropriate endorsements and
transfer documents and to pay any taxes and fees required by law or permitted by
the Indenture. The Registrar need not transfer or exchange any Security selected
for redemption, except the unredeemed part thereof if the Security is redeemed
in part, or transfer or exchange any Securities for a period of 15 days before a
selection of Securities to be redeemed.
8. Persons Deemed Owners.
The registered Holder of this Security shall be treated as the
owner of it for all purposes.
9. Unclaimed Money.
If money for the payment of principal or interest remains
unclaimed for two years, the Trustee or Paying Agent will pay the money back to
the Company at its request. After that, Holders entitled to the money must look
to the Company for payment unless an abandoned property law designates another
person.
10. Amendment, Supplement, Waiver.
Subject to certain exceptions, the Indenture or the Securities
may be amended or supplemented with the consent of the Holders of at least a
majority in principal amount of the outstanding Securities of each Series
affected by the amendment, and any past default or compliance with any provision
relating to any Series of the Securities may be waived in a particular instance
with the consent of the Holders of a majority in principal amount of the
outstanding Securities of such Series.1 Without the consent of any
Securityholder, the Company and the Trustee may amend or supplement the
Indenture or the Securities to cure any ambiguity, defect or inconsistency, to
provide for uncertificated Securities in addition to or in place of certificated
Securities, to create a Series and establish its terms, to remove a Guarantor in
respect of any Series which, in accordance with the terms of the Indenture,
- ---------------------
1 If different terms apply, insert a brief summary thereof.
ceases to be liable in respect of its Guarantee, or to make any other change,
provided such action does not adversely affect the rights of any Securityholder.
11. Successor Corporation.
When a successor corporation assumes all the obligations of
its predecessor under the Securities and the Indenture, the predecessor
corporation will be released from those obligations.
12. Trustee Dealings With Company.
________________________________, the Trustee under the
Indenture, in its individual or any other capacity, may make loans to, accept
deposits from, and perform services for the Company or its affiliates, and may
otherwise deal with the Company or its affiliates, as if it were not Trustee.
13. No Recourse Against Others.
A director, officer, employee or stockholder, as such, of the
Company shall not have any liability for any obligations of the Company under
the Securities or the Indenture or for any claim based on, in respect of or by
reason of, such obligations or their creation. Each Securityholder by accepting
a Security waives and releases all such liability. The waiver and release are
part of the consideration for the issue of the Securities.
- --------------------------------------------------------------------------------
14. Discharge of Indenture.
The Indenture contains certain provisions pertaining to
defeasance, which provisions shall for all purposes have the same effect as if
set forth herein.
15. Authentication.
This Security shall not be valid until the Trustee signs the
certificate of authentication on the other side of this Security.
16. Abbreviations.
Customary abbreviations may be used in the name of a
Securityholder or an assignee, such as: TEN COM (= tenants in common), TEN ENT
(= tenants by the entireties), JT TEN (= joint tenants with right of
survivorship and not as tenants in common), CUST (= custodian), and U/G/M/A (=
Uniform Gifts to Minors Act).
ASSIGNMENT FORM
If you the Holder want to assign this Security, fill in the
form below:
I or we assign and transfer this Security to
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Insert assignee's social security or tax ID number)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address, and zip code)
and irrevocably appoint
- --------------------------------------------------------------------------------
agent to transfer this Security on the books of the Company.
The agent may substitute another to act for him.
- --------------------------------------------------------------------------------
Date: ________________ Your signature:
(Sign exactly as your name appears
on the other side of this Security)
Signature Guarantee:___________________________
<PAGE>
[FORM OF NOTATION ON SECURITY RELATING TO GUARANTEE]
GUARANTEE
[List of Guarantors] (the "Guarantors") have unconditionally
guaranteed, jointly and severally (such guarantee by each Guarantor being
referred to herein as the "Guarantee") (i) the due and punctual payment of the
principal of and interest on the Securities, whether at maturity, by
acceleration or otherwise, the due and punctual payment of interest on the
overdue principal and interest, if any, on the Securities, to the extent lawful,
and the due and punctual performance of all other obligations of the Company to
the Holders or the Trustee all in accordance with the terms set forth in Article
Nine of the Indenture and (ii) in case of any extension of time of payment or
renewal of any Securities or any of such other obligations, that the same will
be promptly paid in full when due or performed in accordance with the terms of
the extension or renewal, whether at stated maturity, by acceleration or
otherwise.
No past, present or future stockholder, officer, director,
employee or incorporator, as such, of any of the Guarantors shall have any
liability under the Guarantee by reason of such person's status as stockholder,
officer, director, employee or incorporator. Each holder of a Security by
accepting a Security waives and releases all such liability. This waiver and
release are part of the consideration for the issuance of the Guarantees.
Each holder of a Security by accepting a Security agrees that
any Guarantor named below shall have no further liability with respect to its
Guarantee if such Guarantor otherwise ceases to be liable in respect of its
Guarantee in accordance with the terms of the Indenture.
<PAGE>
The Guarantee shall not be valid or obligatory for any
purpose until the certificate of authentication on the Securities upon which the
Guarantee is noted shall have been executed by the Trustee under the Indenture
by the manual signature of one of its authorized officers.
[List of Guarantors]
By:_____________________
Title:
EXHIBIT 5.1
-----------
(Letterhead of Gibson, Dunn & Crutcher LLP)
June 2, 1997
D.R. Horton, Inc.
1901 Ascension Blvd., Suite 100
Arlington, Texas 76006
Re: D.R. Horton, Inc. Public Offering
Ladies and Gentlemen:
As counsel for D.R. Horton, Inc., a Delaware corporation (the
"Company"), we are familiar with the Company's Registration Statement on Form
S-3 (as amended, the "Registration Statement") filed with the Securities and
Exchange Commission (the "SEC") under the Securities Act of 1933 (as amended,
the "Act"), on May 21, 1997, and with Amendment No. 1 to the Registration
Statement, filed on the date hereof, with respect to the offering and issuance
from time to time by the Company of up to $250,000,000 aggregate offering price
of the following: (i) one or more series of its debt securities (the "Debt
Securities"), which may be senior debt securities, senior subordinated debt
securities or subordinated debt securities, (ii) shares of its Preferred Stock,
par value $.10 per share (the "Preferred Stock"), or (iii) shares of its Common
Stock, par value $.01 per share (the "Common Stock"). All capitalized terms
which are not defined herein shall have the meanings assigned to them in the
Registration Statement.
In connection with our examination of documents as hereinafter
described, we have assumed the genuineness of all signatures on, and the
authenticity of, all documents submitted to us as originals and the conformity
to original documents of all documents submitted to us as copies. With respect
to agreements and instruments executed by natural persons, we have assumed the
legal competency of such persons.
For the purpose of rendering this opinion, we have made such factual and legal
examination as we deemed necessary under the circumstances, and in that
connection we have examined, among other things, originals or copies of the
following:
<PAGE>
(1) The Certificate of Incorporation of the Company, as
amended to date;
(2) The Bylaws of the Company, as amended to date;
(3) The Form of Senior Debt Securities Indenture (and form
of notes) filed as an exhibit to the Registration Statement;
(4) The Form of Senior Subordinated Debt Securities
Indenture (and form of notes) filed as an exhibit to the
Registration Statement;
(5) The Form of Subordinated Debt Securities Indenture (and form
of notes) filed as an exhibit to the Registration Statement;
(6) Such records of the corporate proceedings of the Company,
and such other documents that we considered necessary or
appropriate for the purpose of rendering this opinion; and
(7) Such other certificates and assurances from
public officials, officers and representatives of the
Company that we considered necessary or appropriate
for the purpose of rendering this opinion.
On the basis of the foregoing examination, and in reliance
thereon, we are of the opinion that (subject to compliance with the pertinent
provisions of the Act and, with respect to the Indentures (as defined below) and
the Debt Securities, the Trust Indenture Act of 1939, as amended, and to
compliance with such securities or "blue sky" laws of any jurisdiction as may be
applicable):
1. When (a) the Debt Securities in substantially the form
contained in (as appropriate) the Form of Senior Debt Securities Indenture, the
Form of Senior Subordinated Debt Securities Indenture or the Form of
Subordinated Debt Securities Indenture (as amended or supplemented in accordance
with the respective terms thereof, each an "Indenture") shall have been
authorized, executed and authenticated in accordance with the terms of the
applicable Indenture, (b) the Indentures shall have been qualified under the
Trust Indenture Act of 1939, duly executed and delivered and (c) the Debt
Securities shall have been issued and sold as described in the Registration
Statement, and if in an underwritten offering, in accordance with the terms and
conditions of the applicable underwriting agreement, and in a manner
contemplated in the Registration Statement, including the Prospectus Supplement
relating to any such Debt Securities, the Debt Securities will be duly
authorized and valid and binding obligations of the Company, subject to the
effect of any bankruptcy, insolvency, reorganization, moratorium, arrangement,
or similar laws affecting the enforcement of creditors' rights generally
(including, without limitation, the effect of statutory or other laws regarding
fraudulent transfers or preferential transfers) and general principles of
equity, regardless of whether enforceability is considered in a proceeding in
equity or at law.
2. When the Preferred Stock shall have been authorized, issued
and sold as described in the Registration Statement, and if in an underwritten
offering, in accordance with the terms and conditions of the applicable
underwriting agreement, and in a manner contemplated in the Registration
Statement, including the Prospectus Supplement relating to the applicable series
of such Preferred Stock, the Preferred Stock will be validly issued, fully paid
and nonassessable.
<PAGE>
3. When the Common Stock shall have been authorized, issued and
sold as described in the Registration Statement, and if in an underwritten
offering, in accordance with the terms and conditions of the applicable
underwriting agreement, and in a manner contemplated in the Registration
Statement, including the Prospectus Supplement relating to the applicable
offering of such Common Stock, the Common Stock will be validly issued, fully
paid and nonassessable.
This opinion is limited to the present corporate laws of the
State of Delaware, the present laws of the State of New York and the present
federal laws of the United States and to the present judicial interpretations
thereof and to the facts as they presently exist. We undertake no obligation to
advise you as a result of developments occurring after the date hereof or as a
result of facts or circumstances brought to our attention after the date hereof.
This opinion may be filed as an exhibit to the Registration
Statement. Consent is also given to the reference to this firm under the caption
"Legal Matters" in the prospectus contained in the Registration Statement. In
giving this consent, we do not admit we are included in the category of persons
whose consent is required under Section 7 of the Act or the rules and
regulations of the SEC promulgated thereunder.
Very truly yours,
/s/ Gibson, Dunn & Crutcher LLP
GIBSON, DUNN & CRUTCHER LLP
EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" and to the
use of our report dated November 8, 1996 (except Note I, as to which the date is
May 16, 1997) in Amendment No. 1 to the Registration Statement (Form S-3) and
related Prospectus of D.R. Horton, Inc. for the registration of an aggregate
maximum total of $250,000,000 of its debt securities, preferred stock and common
stock. We also consent to the incorporation by reference therein of our report
dated November 8, 1996, with respect to the consolidated financial statements of
D.R. Horton, Inc. included in its Annual Report (Form 10-K) for the year ended
September 30, 1996, filed with the Securities and Exchange Commission.
/s/ Ernst & Young LLP
Fort Worth, Texas
May 30, 1997
EXHIBIT 23.3
[Letterhead of Whittington, McLemore, Land, Davis & White, P.C.]
May 30, 1997
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3) and related Prospectus of D.R. Horton, Inc.
for the registration of an aggregate maximum total of $250,000,000 of its debt
securities, preferred stock and common stock and to the incorporation by
reference therein of our report dated February 7, 1997, with respect to the
combined financial statements of S.G. Torrey Atlanta, Ltd. and Affiliates
included in the D.R. Horton, Inc. current report (Form 8-K) dated March 13,
1997, filed with the Securities and Exchange Commission.
Very truly yours,
/s/ Ken White
Whittington, McLemore, Land, Davis, and White, C.P.A.'s, P.C.
DBL/smc
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY AND QUALIFICATION
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
AMERICAN STOCK TRANSFER & TRUST COMPANY
(Exact name of trustee as specified in its charter)
New York 13-3439945
(State of incorporation (I.R.S. employer
if not a national bank) identification No.)
40 Wall Street 10005
New York, New York (Zip Code)
(Address of trustee's
principal executive offices)
D.R. HORTON, INC.
(Exact name of obligor as specified in its charter)
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
Delaware 75-2386963
(Address of principal executive (Zip Code)
offices)
1901 Ascension Blvd., Suite 100 76006
Arlington, Texas
Debt Securities
(Title of the Indenture Securities)
<PAGE>
-2-
GENERAL
1. General Information.
--------------------
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising
authority to which it is subject.
New York State Banking Department, Albany, New York
(b) Whether it is authorized to exercise corporate trust
powers.
The Trustee is authorized to exercise corporate trust
powers.
2. Affiliations with Obligor and Underwriters.
-------------------------------------------
If the obligor or any underwriter for the obligor is an affiliate of
the trustee, describe each such affiliation.
None.
3. Voting Securities of the Trustee.
---------------------------------
Furnish the following information as to each class of voting securities
of the trustee:
As of May 29, 1997
COL. A COL. B
Title of Class Amount Outstanding
Common Shares - par value $600 per share. 1,000 shares
4. Trusteeships under Other Indentures.
------------------------------------
None.
5. Interlocking Directorates and Similar Relationships with the
------------------------------------------------------------
Obligor or Underwriters.
------------------------
None.
<PAGE>
-3-
6. Voting Securities of the Trustee Owned by the Obligor or its
------------------------------------------------------------
Officials.
----------
None.
7. Voting Securities of the Trustee Owned by Underwriters or
---------------------------------------------------------
their Officials.
----------------
None.
8. Securities of the Obligor Owned or Held by the Trustee.
-------------------------------------------------------
None.
9. Securities of Underwriters Owned or Held by the Trustee.
--------------------------------------------------------
None.
10. Ownership or Holdings by the Trustee of Voting Securities of
------------------------------------------------------------
Certain Affiliates or Security Holders of the Obligor.
------------------------------------------------------
None.
11. Ownership or Holdings by the Trustee of any Securities of
---------------------------------------------------------
a Person Owning 50 Percent or More of the Voting Securities
-----------------------------------------------------------
of the Obligor.
---------------
None.
12. Indebtedness of the Obligor to the Trustee.
-------------------------------------------
None.
13. Defaults by the Obligor.
------------------------
None.
14. Affiliations with the Underwriters.
-----------------------------------
None.
15. Foreign Trustee.
----------------
Not applicable.
<PAGE>
-4-
16. List of Exhibits.
-----------------
T-1.1 - A copy of the Organization Certificate of American
Stock Transfer & Trust Company, as amended to date
including authority to commence business and
exercise trust powers was filed in connection with
the Registration Statement of Live Entertainment,
Inc., File No. 33-54654, and is incorporated herein
by reference.
T-1.4 - A copy of the By-Laws of American Stock Transfer
& Trust Company, as amended to date was filed in
connection with the Registration Statement of Live
Entertainment, Inc., File No. 33-54654, and is
incorporated herein by reference.
T-1.6 - The consent of the Trustee required by Section
312(b) of the Trust Indenture Act of 1939. -
Exhibit A.
T-1.7 - A copy of the latest report of condition of the
Trustee published pursuant to law or the
requirements of its supervising or examining
authority was filed in connection with the
Registration Statement of Key Energy Group, Inc.
File No. 333-24497, and is incorporated herein by
reference.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939 the Trustee,
American Stock Transfer and Trust Company, a corporation organized and existing
under the laws of the State of New York, has duly caused this statement of
eligibility and qualification to be signed on its behalf by the undersigned,
thereunto duly authorized, all in the City of New York, and State of New York,
on the 29th day of May 1997.
AMERICAN STOCK TRANSFER
AND TRUST COMPANY
Trustee
By:/s/ Herbert Lemmer
Vice President
<PAGE>
EXHIBIT A
---------
Securities and Exchange Commission
Washington, DC 20549
Gentlemen:
Pursuant to the provisions of Section 321 (b) of the Trust Indenture Act of
1939, and subject to the limitations therein contained, American Stock Transfer
& Trust Company hereby consents that reports of examinations of said corporation
by Federal, State, Territorial or District authorities may be furnished by such
authorities to you upon request therefor.
Very truly yours,
AMERICAN STOCK TRANSFER
& TRUST COMPANY
By /s/ Herbert Lemmer
Vice President
