Exhibit 4.18
FORM OF GUARANTEE AGREEMENT
GUARANTEE AGREEMENT
Between
D.R. HORTON, INC.
(as Guarantor)
and
AMERICAN STOCK TRANSFER & TRUST COMPANY
(as Trustee)
Dated as of ________________, ____
TABLE OF CONTENTS*
Page
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ARTICLE I DEFINITIONS.......................................................................................... 1
Section 1.01. Definitions............................................................. 1
ARTICLE II TRUST INDENTURE ACT................................................................................. 3
Section 2.01. Trust Indenture Act; Application........................................ 3
Section 2.02. Lists of Holders of Securities.......................................... 4
Section 2.03. Reports by the Trustee.................................................. 4
Section 2.04. Periodic Reports to Trustee............................................. 4
Section 2.05. Evidence of Compliance with Conditions Precedent........................ 5
Section 2.06. Events of Default; Waiver............................................... 5
Section 2.07. Event of Default; Notice................................................ 5
Section 2.08. Conflicting Interests................................................... 5
ARTICLE III POWERS, DUTIES AND RIGHTS OF TRUSTEE............................................................... 6
Section 3.01. Powers and Duties of the Trustee........................................ 6
Section 3.02. Certain Rights of Trustee............................................... 7
Section 3.03. Compensation; Fees; Indemnity........................................... 8
ARTICLE IV TRUSTEE............................................................................................. 9
Section 4.01. Trustee; Eligibility.................................................... 9
Section 4.02. Appointment, Removal and Resignation of Trustee......................... 9
ARTICLE V GUARANTEE............................................................................................ 10
Section 5.01. Guarantee............................................................... 10
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* This Table of Contents does not constitute part of the Indenture or
have any bearing upon the interpretation of any of its terms and
provisions.
TABLE OF CONTENTS
(CONTINUED)
Page
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Section 5.02. Waiver of Notice and Demand............................................. 10
Section 5.03. Obligations Not Affected................................................ 10
Section 5.04. Rights of Holders....................................................... 11
Section 5.05. Guarantee Of Payment.................................................... 12
Section 5.06. Subrogation............................................................. 12
Section 5.07. Independent Obligations................................................. 12
ARTICLE VI SUBORDINATION....................................................................................... 12
Section 6.01. Subordination........................................................... 12
ARTICLE VII TERMINATION........................................................................................ 12
Section 7.01. Termination............................................................. 12
ARTICLE VIII MISCELLANEOUS..................................................................................... 13
Section 8.01. Successors and Assigns.................................................. 13
Section 8.02. Amendments.............................................................. 13
Section 8.03. Notices................................................................. 13
Section 8.04. Benefit................................................................. 14
Section 8.05. Interpretation.......................................................... 14
Section 8.06. Governing Law........................................................... 15
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TABLE OF CONTENTS
(CONTINUED)
CROSS-REFERENCE TABLE*
Page
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Section of Trust Indenture Act of Section of Guarantee
1939, as amended Agreement
310(a)..................................................................................... 4.01(a)
310(b)..................................................................................... 4.01(c), 2.08
310(c)..................................................................................... Inapplicable
311(a)..................................................................................... 2.02(b)
311(b)..................................................................................... 2.02(b)
311(c)..................................................................................... Inapplicable
312(a)..................................................................................... 2.02(a)
312(b)..................................................................................... 2.02(b)
313........................................................................................ 2.03
314(a)..................................................................................... 2.04
314(b)..................................................................................... Inapplicable
314(c)..................................................................................... 2.05
314(d)..................................................................................... Inapplicable
314(e)..................................................................................... 1.01, 2.05, 3.02
314(f)..................................................................................... 2.01, 3.02
315(a)..................................................................................... 3.01(d)
315(b)..................................................................................... 2.07
315(c)..................................................................................... 3.01
315(d)..................................................................................... 3.01(d)
315(e)..................................................................................... Inapplicable
316(a)..................................................................................... 5.04(i), 2.06
316(b)..................................................................................... 5.03
316(c)..................................................................................... 2.02
317(a)..................................................................................... Inapplicable
317(b)..................................................................................... Inapplicable
318(a)..................................................................................... 2.01(b)
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* This Cross-Reference Table does not constitute part of the Guarantee
Agreement and shall not affect the interpretation of any of its terms
and provisions.
iii
TABLE OF CONTENTS
(CONTINUED)
Page
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318(b)..................................................................................... 2.01
318(c)..................................................................................... 2.01(a)
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GUARANTEE AGREEMENT
This GUARANTEE AGREEMENT ("Guarantee Agreement"), dated as of
_________, ____ is executed and delivered by D.R. HORTON, INC., a Delaware
corporation (the "Guarantor"), and American Stock Transfer & Trust Company, a
New York corporation, as trustee (the "Trustee"), for the benefit of the Holders
(as defined herein) from time to time of the Trust Preferred Securities (as
defined herein) of DRH CAPITAL TRUST II, a Delaware statutory business trust
(the "Trust ").
WHEREAS, pursuant to an Amended and Restated Trust Agreement (the
"Trust Agreement"), dated as of _______________, ____, among the Trustee, the
other Trustees named therein, and D.R. Horton, Inc., as Depositor, the Trust is
issuing as of the date hereof $___________ aggregate liquidation amount of its
_____% Trust Preferred Securities (the "Trust Preferred Securities")
representing preferred undivided beneficial interests in the assets of the Trust
and having the terms set forth in the Trust Agreement;
WHEREAS, the Trust Preferred Securities will be issued by the Trust and
the proceeds thereof will be used to purchase Subordinated Debentures (as
defined in the Trust Agreement) of the Guarantor, which will be held by the
Trust as trust assets; and
WHEREAS, as incentive for the Holders to purchase the Trust Preferred
Securities, the Guarantor desires to irrevocably and unconditionally agree, to
the extent set forth herein, to pay to the Holders the Guarantee Payments (as
defined herein) and to make certain other payments on the terms and conditions
set forth herein.
NOW, THEREFORE, in consideration of the payment for Trust Preferred
Securities by each Holder thereof, which payment the Guarantor hereby agrees
shall benefit the Guarantor, the Guarantor executes and delivers this Guarantee
Agreement for the benefit of the Holders from time to time of the Trust
Preferred Securities.
ARTICLE I
DEFINITIONS
SECTION 1.01. DEFINITIONS.
As used in this Guarantee Agreement, the terms set forth below shall,
unless the context otherwise requires, have the following meanings. Capitalized
or otherwise defined terms used but not otherwise defined herein shall have the
meanings assigned to such terms in the Trust Agreement as in effect on the date
hereof.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Event of Default" means a failure by the Guarantor to perform any of
its payment obligations under this Guarantee Agreement.
"Guarantee Payments" shall mean the following payments or
distributions, without duplication, with respect to the Trust Preferred
Securities, to the extent not paid or made by or on behalf of the Trust: (i) any
accrued and unpaid distributions that are required to be paid on such Trust
Preferred Securities but if and only if and to the extent the Trust has funds
legally and immediately available therefor to make such payment; (ii) the
redemption price, including all accrued and unpaid distributions to the date of
redemption (the "Redemption Price"), with respect to the Trust Preferred
Securities called for redemption by the Trust but if and only if and to the
extent that the Trust has funds legally and immediately available therefor
sufficient to make such payment; and (iii) upon a voluntary or involuntary
dissolution, winding-up or termination of the Trust (other than in connection
with the distribution of Subordinated Debentures to the holders of Trust
Securities or the redemption of all of the Trust Preferred Securities), the
lesser of (a) the aggregate of the liquidation amount and all accrued and unpaid
distributions on the Trust Preferred Securities to the date of payment, to the
extent the Trust has funds legally and immediately available therefor, and (b)
the amount of assets of the Trust remaining available for distribution to
Holders in liquidation of the Trust (in either case, the "Liquidation
Distribution").
"Holder" shall mean any holder, as registered on the books and records
of the Trust, of any Trust Preferred Securities; provided, however, that in
determining whether the holders of the requisite percentage of Trust Preferred
Securities have given any request, notice, consent or waiver hereunder, "Holder"
shall not include the Guarantor or any Affiliate of the Guarantor.
"Indenture" means the Subordinated Trust Debt Securities Indenture,
dated as of ________ __, ____, among the Guarantor, as issuer, and American
Stock Transfer & Trust Company, as trustee, as supplemented by the ___
Supplemental Indenture dated as of _______________, ____, by and between the
Guarantor and American Stock Transfer & Trust Company, as trustee.
"Majority in liquidation amount of Trust Preferred Securities" means a
vote by Holder(s) of Trust Preferred Securities, voting separately as a class,
of more than 50% of the liquidation amount of all Trust Preferred Securities
outstanding at the time of determination.
"Officers' Certificate" means a certificate signed by the Chairman of
the Board, the Chief Executive Officer, the President or a Vice President, and
by the Treasurer, an Assistant Treasurer, the Controller, the Secretary or an
Assistant Secretary, of the Guarantor, and delivered to the Trustee. Any
Officers' Certificate delivered with respect to compliance with a condition or
covenant provided for in this Guarantee Agreement shall include:
(a) a statement that each officer signing the Officers'
Certificate has read such covenant or condition and the definitions herein
relating thereto;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions contained in
the Officers' Certificate are based;
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(c) a statement that, in the opinion of each such
officer, 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
(d) a statement as to whether, in the opinion of each
such officer, such condition or covenant has been complied with.
"Person" means any individual, corporation, partnership, limited
liability company, joint venture, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Responsible Officer" means, with respect to the Trustee, any Vice
President, any Assistant Vice President, the Secretary, any Assistant Secretary,
the Treasurer, any Assistant Treasurer, any Senior Trust Officer, Trust Officer
or Assistant Trust Officer or any other officer of the Corporate Trust
Department of the Trustee customarily performing functions similar to those
performed by any of the above designated officers and also means, with respect
to a particular corporate trust matter, any other officer to whom such matter is
referred because of that officer's knowledge of and familiarity with the
particular subject.
"Successor Trustee" means a successor Trustee possessing the
qualifications to act as Trustee under Section 4.01.
"Trust Common Securities" means the securities representing common
undivided beneficial interests in the assets of the Trust.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended.
"Trust Securities" means the Trust Preferred Securities and the Trust
Common Securities.
"Trustee" means American Stock Transfer & Trust Company until a
Successor Trustee has been appointed and has accepted such appointment pursuant
to the terms of this Guarantee Agreement and thereafter means each such
Successor Trustee.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.01. TRUST INDENTURE ACT; APPLICATION.
(a) This Guarantee Agreement is subject to the provisions
of the Trust Indenture Act that are required to be part of this Guarantee
Agreement and shall, to the extent applicable, be governed by such provisions;
and
(b) If and to the extent that any provision of this
Guarantee Agreement limits, qualifies or conflicts with the duties imposed by
Sections 310 to 317, inclusive, of the Trust Indenture Act, such imposed duties
shall control.
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SECTION 2.02. LISTS OF HOLDERS OF SECURITIES.
(a) The Guarantor shall furnish or cause to be furnished
to the Trustee (a) semiannually, not later than _____ and _____ in each year, a
list, in such form as the Trustee may reasonably require, of the names and
addresses of the Holders ("List of Holders") as of a date not more than 15 days
prior to the time such list is furnished, and (b) at such other times as the
Trustee may request in writing, within 30 days after the receipt by the
Guarantor of any such request, a List of Holders as of a date not more than 15
days prior to the time such list is furnished; provided that, the Guarantor
shall not be obligated to provide such List of Holders at any time the List of
Holders does not differ from the most recent List of Holders given to the
Trustee by the Guarantor or at any time the Trustee is the Securities Registrar
under the Trust Agreement. The Trustee may destroy any List of Holders
previously given to it on receipt of a new List of Holders.
(b) The Trustee shall comply with its obligations under
Sections 311(a), 311(b) and 312(b) of the Trust Indenture Act. For purposes of
Section 311(b)(4) and (6) of the Trust Indenture Act:
(i) "cash transaction" means any transaction in
which full payment for goods or securities sold is made within seven
days after delivery of the goods or securities in currency or in checks
or other orders drawn upon banks or bankers and payable upon demand;
and
(ii) "self-liquidating paper" means any draft,
bill of exchange, acceptance or obligation which is made, drawn,
negotiated or incurred by the Depositor or the Trust (or any such
obligor) for the purpose of financing the purchase, processing,
manufacturing, shipment, storage or sale of goods, wares or merchandise
and which is secured by documents evidencing title to, possession of,
or a lien upon, the goods, wares or merchandise or the receivables or
proceeds arising from the sale of the goods, wares or merchandise
previously constituting the security, provided the security is received
by the Property Trustee simultaneously with the creation of the
creditor relationship with the Depositor or the Trust (or any such
obligor) arising from the making, drawing, negotiating or incurring of
the draft, bill of exchange, acceptance or obligation.
SECTION 2.03. REPORTS BY THE TRUSTEE.
Within 60 days after May 15 of each year commencing _____, _____, the
Trustee shall provide to the Holders of the Trust Preferred Securities such
reports as are required by Section 313(a) of the Trust Indenture Act, if any, in
the form and in the manner provided by Section 313 of the Trust Indenture Act.
The Trustee shall also comply with the other requirements of Section 313 of the
Trust Indenture Act.
SECTION 2.04. PERIODIC REPORTS TO TRUSTEE.
The Guarantor shall provide to the Trustee such documents, reports and
information as required by Section 314 of the Trust Indenture Act (if any) in
the form, in the manner and at the times required by Section 314 of the Trust
Indenture Act, and shall provide, within 120 days after the end of each fiscal
year of the Guarantor, the compliance certificate required by
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Section 314(a)(4) of the Trust Indenture Act in the form and in the manner
required by such Section.
SECTION 2.05. EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT.
The Guarantor shall provide to the Trustee such evidence of compliance
with any conditions precedent, if any, provided for in this Guarantee Agreement
that relate to any of the matters set forth in Section 314(c) of the Trust
Indenture Act. Any certificate or opinion required to be given by an officer
pursuant to Section 314(c)(1) may be given in the form of an Officers'
Certificate.
SECTION 2.06. EVENTS OF DEFAULT; WAIVER.
The Holders of a Majority in liquidation amount of Trust Preferred
Securities may, by vote, on behalf of all of the Holders, waive any past Event
of Default and its consequences. Upon such waiver, any such Event of Default
shall cease to exist, and any Event of Default arising therefrom shall be deemed
to have been cured and not to have existed, for every purpose of this Guarantee
Agreement, but no such waiver shall extend to any subsequent or other default or
Event of Default or impair any right consequent thereon.
SECTION 2.07. EVENT OF DEFAULT; NOTICE.
(a) The Trustee shall, within 90 days after the
occurrence of an Event of Default actually known to the Trustee, transmit by
mail, first class postage prepaid, to the Holders, notices of all such Events of
Default, unless such defaults have been cured before the giving of such notice,
provided that the Trustee shall be protected in withholding such notice if and
so long as the board of directors, the executive committee, or a trust committee
of directors and/or Responsible Officers of the Trustee in good faith determines
that the withholding of such notice is in the interests of the Holders.
(b) The Trustee shall not be deemed to have knowledge of
any Event of Default unless the Trustee shall have received written notice, or a
Responsible Officer charged with the administration of the Trust Agreement shall
have obtained written notice, of such Event of Default.
SECTION 2.08. CONFLICTING INTERESTS.
The Trust Agreement shall be deemed to be specifically described in
this Guarantee Agreement for the purposes of clause (i) of the first proviso
contained in Section 310(b) of the Trust Indenture Act.
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ARTICLE III
POWERS, DUTIES AND RIGHTS OF TRUSTEE
SECTION 3.01. POWERS AND DUTIES OF THE TRUSTEE.
(a) This Guarantee Agreement shall be held by the Trustee
for the benefit of the Holders, and the Trustee shall not transfer this
Guarantee Agreement to any Person except the Trustee shall assign rights
hereunder to a Holder to the extent such assignment is necessary to exercise
such Holder's rights pursuant to Section 5.04 or to a Successor Trustee upon
acceptance by such Successor Trustee of its appointment to act as Successor
Trustee. The right, title and interest of the Trustee shall automatically vest
in any Successor Trustee, and such vesting and cessation of title shall be
effective whether or not conveyancing documents have been executed and delivered
pursuant to the appointment of such Successor Trustee.
(b) If an Event of Default has occurred and is
continuing, the Trustee shall enforce this Guarantee Agreement for the benefit
of the Holders.
(c) The Trustee, before the occurrence of any Event of
Default and after the curing or waiving of all Events of Default that may have
occurred, shall undertake to perform only such duties as are specifically set
forth in this Guarantee Agreement, and no implied covenants shall be read into
this Guarantee Agreement against the Trustee. In case an Event of Default has
occurred (that has not been cured or waived pursuant to Section 2.06), the
Trustee shall exercise such of the rights and powers vested in it by this
Guarantee Agreement, and use the same degree of care and skill in its exercise
thereof, as a prudent person would exercise or use under the circumstances in
the conduct of his or her own affairs.
(d) No provision of this Guarantee Agreement shall be
construed to relieve the Trustee from liability for its own negligent action,
its own negligent failure to act, or its own willful misconduct, except that:
(i) prior to the occurrence of any Event of
Default and after the curing or waiving of all such Events of Default that may
have occurred:
(A) the duties and obligations of the
Trustee shall be determined solely by the express
provisions of this Guarantee Agreement, and the
Trustee shall not be liable except for the
performance of such duties and obligations as are
specifically set forth in this Guarantee Agreement;
and
(B) in the absence of bad faith on the
part of the Trustee, the Trustee may conclusively
rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon
any certificates or opinions furnished to the Trustee
and conforming to the requirements of this Guarantee
Agreement; but in the case of any such certificates
or opinions that by any provision hereof are
specifically required to be furnished to the Trustee,
the Trustee shall be under a duty to examine the
6
same to determine whether or not they conform to the
requirements of this Guarantee Agreement;
(ii) the Trustee shall not be liable for any
error of judgment made in good faith by a Responsible Officer of the Trustee,
unless it shall be proved that the Trustee was negligent in ascertaining the
pertinent facts upon which such judgment was made;
(iii) the Trustee shall not be liable with respect
to any action taken or omitted to be taken by it in good faith in accordance
with the direction of the Holders of a Majority in liquidation amount of the
Trust Preferred Securities relating to the time, method and place of conducting
any proceeding for any remedy available to the Trustee, or exercising any trust
or power conferred upon the Trustee under this Guarantee Agreement; and
(iv) no provision of this Guarantee Agreement
shall require the Trustee to expend or risk its own funds or otherwise incur
personal financial liability in the performance of any of its duties or in the
exercise of any of its rights or powers, if the Trustee shall have reasonable
grounds for believing that the repayment of such funds or liability is not
reasonably assured to it under the terms of this Guarantee Agreement or adequate
indemnity against such risk or liability is not reasonably assured to it.
SECTION 3.02. CERTAIN RIGHTS OF TRUSTEE.
(a) Subject to the provisions of Section 3.01:
(i) the Trustee may rely and shall be fully
protected in acting or refraining from acting upon any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction, consent,
order, bond, debenture, note, other evidence of indebtedness or other paper or
document believed by it to be genuine and to have been signed, sent or presented
by the proper party or parties;
(ii) any direction or act of the Guarantor
contemplated by this Guarantee Agreement shall be sufficiently evidenced by an
Officers' Certificate;
(iii) whenever, in the administration of this
Guarantee Agreement, the Trustee shall deem it desirable that a matter be proved
or established before taking, suffering or omitting any action hereunder, the
Trustee (unless other evidence is herein specifically prescribed) may, in the
absence of bad faith on its part, request and rely upon an Officers' Certificate
which, upon receipt of such request, shall be promptly delivered by the
Guarantor;
(iv) the Trustee may consult with counsel of its
choice, and the written advice or opinion of such counsel with respect to legal
matters shall be full and complete authorization and protection in respect of
any action taken, suffered or omitted by it hereunder in good faith and in
accordance with such advice or opinion; such counsel may be counsel to the
Guarantor or any of its Affiliates and may include any of its employees; the
Trustee shall have the right at any time to seek instructions concerning the
administration of this Guarantee Agreement from any court of competent
jurisdiction;
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(v) the Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Guarantee Agreement at
the request or direction of any Holder, unless such Holder shall have provided
to the Trustee such adequate security and indemnity as would satisfy a
reasonable person in the position of the Trustee, against the costs, expenses
(including attorneys' fees and expenses) and liabilities that might be incurred
by it in complying with such request or direction, including such reasonable
advances as may be requested by the Trustee; provided that nothing contained in
this Section 3.02(a)(v) shall be taken to relieve the Trustee, upon the
occurrence of an Event of Default, of its obligation to exercise the rights and
powers vested in it by this Guarantee Agreement;
(vi) the Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction, consent,
order, bond, debenture, note, other evidence of indebtedness or other paper or
document, but the Trustee, in its discretion, may make such further inquiry or
investigation into such facts or matters as it may see fit;
(vii) the Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or by or
through agents or attorneys, and the Trustee shall not be responsible for any
misconduct or negligence on the part of any agent or attorney appointed with due
care by it hereunder; and
(viii) whenever in the administration of this
Guarantee Agreement the Trustee shall deem it desirable to receive instructions
with respect to enforcing any remedy or right or taking any other action
hereunder, the Trustee (i) may request instructions from the Holders, (ii) may
refrain from enforcing such remedy or right or taking such other action until
such instructions are received, and (iii) shall be protected in acting in
accordance with such instructions.
(b) No provision of this Guarantee Agreement shall be
deemed to impose any duty or obligation on the Trustee to perform any act or
acts or exercise any right, power, duty or obligation conferred or imposed on it
in any jurisdiction in which it shall be illegal, or in which the Trustee shall
be unqualified or incompetent in accordance with applicable law, to perform any
such act or acts or to exercise any such right, power, duty or obligation. No
permissive power or authority available to the Trustee shall be construed to be
a duty.
SECTION 3.03. COMPENSATION; FEES; INDEMNITY.
The Guarantor agrees:
(a) to pay to the Trustee from time to time reasonable
compensation for all services rendered by the Trustee hereunder (which
compensation shall not be limited by any provision of law in regard to the
compensation of a trustee of an express trust);
(b) except as otherwise expressly provided herein, to
reimburse the Trustee upon request for all reasonable expenses, disbursements
and advances incurred or made by the Trustee in accordance with any provision of
this Guarantee Agreement (including the reasonable compensation and the expenses
and disbursements of its agents and counsel), except any such expense,
disbursement or advance as may be attributable to its negligence or bad faith;
and
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(c) to indemnify the Trustee for, and to hold the Trustee
harmless against, any and all loss, damage, claims, liability or expense
incurred without negligence or bad faith on its part, arising out of or in
connection with the acceptance or administration of this Guarantee Agreement,
including the costs and expenses of defending itself against any claim or
liability in connection with the exercise or performance of any of its powers or
duties hereunder.
The provisions of this Section 3.03 shall survive the termination of
this Guarantee Agreement or the resignation or removal of the Trustee.
ARTICLE IV
TRUSTEE
SECTION 4.01. TRUSTEE; ELIGIBILITY.
(a) There shall at all times be a Trustee which shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a corporation organized and doing
business under the laws of the United States of America or any State or
Territory thereof or of the District of Columbia, or a corporation or Person
permitted by the Securities and Exchange Commission to act as an institutional
trustee under the Trust Indenture Act, authorized under such laws to exercise
corporate trust powers, having a combined capital and surplus of at least
$10,000,000, and subject to supervision or examination by Federal, State,
Territorial or District of Columbia authority. If such corporation publishes
reports of condition at least annually, pursuant to law or to the requirements
of the supervising or examining authority referred to above, then, for the
purposes of this Section 4.01(a)(ii), the combined capital and surplus of such
corporation shall be deemed to be its combined capital and surplus as set forth
in its most recent report of condition so published.
(b) If at any time the Trustee shall cease to be eligible
to so act under Section 4.01(a), the Trustee shall immediately resign in the
manner and with the effect set out in Section 4.02(c).
(c) If the Trustee has or shall acquire any "conflicting
interest" within the meaning of Section 310(b) of the Trust Indenture Act, the
Trustee and Guarantor shall in all respects comply with the provisions of
Section 310(b) of the Trust Indenture Act, subject to the rights of the Trustee
under the penultimate paragraph thereof.
SECTION 4.02. APPOINTMENT, REMOVAL AND RESIGNATION OF TRUSTEE.
(a) Subject to Section 4.02(b), the Trustee may be
appointed or removed without cause at any time by the Guarantor.
(b) The Trustee shall not be removed until a Successor
Trustee has been appointed and has accepted such appointment by written
instrument executed by such Successor Trustee and delivered to the Guarantor.
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(c) The Trustee appointed to office shall hold office
until a Successor Trustee shall have been appointed or until its removal or
resignation. The Trustee may resign from office (without need for prior or
subsequent accounting) by an instrument in writing executed by the Trustee and
delivered to the Guarantor, which resignation shall not take effect until a
Successor Trustee has been appointed and has accepted such appointment by
instrument in writing executed by such Successor Trustee and delivered to the
Guarantor and the resigning Trustee.
(d) If no Successor Trustee shall have been appointed and
accepted appointment as provided in this Section 4.02 within 60 days after
delivery to the Guarantor of an instrument of resignation, the resigning Trustee
may petition any court of competent jurisdiction for appointment of a Successor
Trustee. Such court may thereupon, after prescribing such notice, if any, as it
may deem proper, appoint a Successor Trustee.
ARTICLE V
GUARANTEE
SECTION 5.01. GUARANTEE.
The Guarantor irrevocably and unconditionally agrees to pay in full to
the Holders the Guarantee Payments (without duplication of amounts theretofore
paid by or on behalf of the Trust), as and when due, regardless of any defense,
right of set-off or counterclaim which the Guarantor may have or assert against
any person. The Guarantor's obligation to make a Guarantee Payment may be
satisfied by direct payment of the required amounts by the Guarantor to the
Holders or by causing the Trust to pay such amounts to the Holders.
SECTION 5.02. WAIVER OF NOTICE AND DEMAND.
The Guarantor hereby waives notice of acceptance of this Guarantee
Agreement and of any liability to which it applies or may apply, presentment,
demand for payment, any right to require a proceeding first against the Trust or
any other Person before proceeding against the Guarantor, protest, notice of
nonpayment, notice of dishonor, notice of redemption and all other notices and
demands.
SECTION 5.03. OBLIGATIONS NOT AFFECTED.
The obligation of the Guarantor to make the Guarantee Payments under
this Guarantee Agreement shall in no way be affected or impaired by reason of
the happening from time to time of any of the following:
(a) the release or waiver, by operation of law or
otherwise, of the performance or observance by the Trust of any express or
implied agreement, covenant, term or condition relating to the Trust Preferred
Securities to be performed or observed by the Trust;
(b) the extension of time for the payment by the Trust of
all or any portion of the Distributions, Redemption Price, Liquidation
Distribution or any other sums payable under the terms of the Trust Preferred
Securities or the extension of time for the performance of any other obligation
under, arising out of, or in connection with, the Trust Preferred Securities
(other
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than an extension of time for payment of Distributions, Redemption Price,
Liquidation Distribution or other sum payable that results from the extension of
any interest payment period on the Subordinated Debentures permitted by the
Indenture);
(c) any failure, omission, delay or lack of diligence on
the part of the Holders to enforce, assert or exercise any right, privilege,
power or remedy conferred on the Holders pursuant to the terms of the Trust
Preferred Securities, or any action on the part of the Trust granting indulgence
or extension of any kind;
(d) the voluntary or involuntary liquidation,
dissolution, sale of any collateral, receivership, insolvency, bankruptcy,
assignment for the benefit of creditors, reorganization, arrangement,
composition or readjustment of debt of, or other similar proceedings affecting,
the Trust or any of the assets of the Trust;
(e) any invalidity of, or defect or deficiency in, the
Trust Preferred Securities;
(f) the settlement or compromise of any obligation
guaranteed hereby or hereby incurred; or
(g) any other circumstance whatsoever that might
otherwise constitute a legal or equitable discharge or defense of a guarantor,
it being the intent of this Section 5.03 that the obligations of the Guarantor
hereunder shall be absolute and unconditional under any and all circumstances.
There shall be no obligation of the Holders to give notice to, or
obtain consent of, the Guarantor with respect to the happening of any of the
foregoing.
SECTION 5.04. RIGHTS OF HOLDERS.
The Guarantor expressly acknowledges that: (i) this Guarantee Agreement
will be deposited with the Trustee to be held for the benefit of the Holders;
(ii) the Trustee has the right to enforce this Guarantee Agreement on behalf of
the Holders; (iii) the Holders of a Majority in liquidation amount of the Trust
Preferred Securities have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee in respect of
this Guarantee Agreement or to direct the exercise of any trust or power
conferred upon the Trustee under this Guarantee Agreement, provided that such
direction shall not be in conflict with any rule of law or with this Guarantee
Agreement, and could not involve the Trustee in personal liability in
circumstances where reasonable indemnity would not be adequate; and (iv) any
Holder may institute a legal proceeding directly against the Guarantor to
enforce its rights under this Guarantee Agreement, without first instituting a
legal proceeding against or requesting or directing that action be taken by the
Trustee or any other person; it being understood and intended that no one or
more of such Holders shall have any right in any manner whatsoever by virtue of,
or by availing of, any provision of this Guarantee Agreement to affect, disturb
or prejudice the rights of any other of such Holders or to obtain or to seek to
obtain priority or preference over any other of such Holders or to enforce any
right under this Guarantee Agreement, except in the manner herein provided and
for the equal and ratable benefit of all of such Holders.
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SECTION 5.05. GUARANTEE OF PAYMENT.
This Guarantee Agreement creates a guarantee of payment and not of
collection. This Guarantee Agreement will not be discharged except by payment of
the Guarantee Payments in full (without duplication) or upon the distribution of
Subordinated Debentures to the Holders in exchange for all of the Trust
Preferred Securities.
SECTION 5.06. SUBROGATION.
The Guarantor shall be subrogated to all (if any) rights of the Holders
against the Trust in respect of any amounts paid to the Holders by the Guarantor
under this Guarantee Agreement; provided, however, that the Guarantor shall not
(except to the extent required by mandatory provisions of law) be entitled to
enforce or exercise any rights which it may acquire by way of subrogation or any
indemnity, reimbursement or other agreement, in all cases as a result of payment
under this Guarantee Agreement, if, at the time of any such payment, any amounts
of Guarantee Payments are due and unpaid under this Guarantee Agreement. If any
amount shall be paid to the Guarantor in violation of the preceding sentence,
the Guarantor agrees to hold such amount in trust for the Holders and to pay
over such amount to the Holders.
SECTION 5.07. INDEPENDENT OBLIGATIONS.
The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Trust with respect to the Trust Preferred
Securities and that the Guarantor shall be liable as principal and as debtor
hereunder to make Guarantee Payments pursuant to the terms of this Guarantee
Agreement notwithstanding the occurrence of any event referred to in subsections
(a) through (g), inclusive, of Section 5.03 hereof.
ARTICLE VI
SUBORDINATION
SECTION 6.01. SUBORDINATION.
This Guarantee Agreement will constitute an unsecured obligation of the
Guarantor and will rank (i) subordinate and junior in right of payment to all
other liabilities of the Guarantor, including the Subordinated Debentures,
except those obligations or liabilities made pari passu or subordinate by their
terms, (ii) pari passu with the most senior preferred stock now or hereafter
issued or guaranteed by the Guarantor, and (iii) senior to all common stock of
the Guarantor.
ARTICLE VII
TERMINATION
SECTION 7.01. TERMINATION.
This Guarantee Agreement shall terminate and be of no further force and
effect upon: (i) full payment of the Redemption Price of all Trust Preferred
Securities, (ii) the distribution of Subordinated Debentures to the Holders in
exchange for all of the Trust Preferred Securities, or
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(iii) full payment of the amounts payable in accordance with the Trust Agreement
upon liquidation of the Trust. Notwithstanding the foregoing, this Guarantee
Agreement will continue to be effective or will be reinstated, as the case may
be, if at any time any Holder must restore payment of any sums paid with respect
to Trust Preferred Securities or under this Guarantee Agreement.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. SUCCESSORS AND ASSIGNS.
All guarantees and agreements contained in this Guarantee Agreement
shall bind the successors, assigns, receivers, trustees and representatives of
the Guarantor and shall inure to the benefit of the Holders then outstanding.
Except in connection with a consolidation, merger, conveyance, transfer, or
lease involving the Guarantor that is permitted under Article Eight of the
Indenture, the Guarantor shall not assign its obligations hereunder.
SECTION 8.02. AMENDMENTS.
Except with respect to any changes which do not materially and
adversely affect the rights of Holders (in which case no consent of Holders will
be required), this Guarantee Agreement may only be amended with the prior
approval of the Holders of not less than a majority in liquidation amount of all
the outstanding Trust Preferred Securities. The provisions of Article Six of the
Trust Agreement concerning meetings of Holders shall apply to the giving of such
approval.
SECTION 8.03. NOTICES.
Any notice, request or other communication required or permitted to be
given hereunder shall be in writing, duly signed by the party giving such
notice, and delivered, telecopied or mailed by first class mail as follows:
(a) if given to the Guarantor, to the address set forth
below or such other address as the Guarantor may give notice of to the Trustee
and the Holders:
D.R. Horton, Inc.
1901 Ascension Blvd., Suite 100
Arlington, Texas 76006
Attention: Chief Financial Officer
Facsimile No. (817) 856-8252
(b) if given to the Trust, in care of the Trustee, or to
the Trustee at the Trust's (and the Trustee's) address set forth below or such
other address as the Trustee on behalf of the Trust may give notice of to the
Holders:
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DRH Capital Trust II
c/o D.R. Horton, Inc.
1901 Ascension Blvd., Suite 100
Arlington, Texas 76006
Attention: Chief Financial Officer
Facsimile No. (817) 856-8252
with a copy, in the case of a notice to the Trust (other than a notice from the
Guarantor), to the Guarantor.
(c) if given to any Holder, at the address set forth on
the books and records of the Trust.
All notices hereunder shall be deemed to have been given when received
in person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid except that if a notice or other document is refused delivery or
cannot be delivered because of a changed address of which no notice was given,
such notice or other document shall be deemed to have been delivered on the date
of such refusal or inability to deliver.
SECTION 8.04. BENEFIT.
This Guarantee Agreement is solely for the benefit of the Holders and,
subject to Section 3.01(a), is not separately transferable from the Trust
Preferred Securities.
SECTION 8.05. INTERPRETATION.
In this Guarantee Agreement, unless the context otherwise requires:
(a) capitalized terms used in this Guarantee Agreement
but not defined in the preamble hereto have the respective meanings assigned to
them in Section 1.01;
(b) a term defined anywhere in this Guarantee Agreement
has the same meaning throughout;
(c) all references to "the Guarantee Agreement" or "this
Guarantee Agreement" are to this Guarantee Agreement as modified, supplemented
or amended from time to time;
(d) all references in this Guarantee Agreement to
Articles and Sections are to Articles and Sections of this Guarantee Agreement
unless otherwise specified;
(e) a term defined in the Trust Indenture Act has the
same meaning when used in this Guarantee Agreement unless otherwise defined in
this Guarantee Agreement or unless the context otherwise requires;
(f) a reference to the singular includes the plural and
vice versa; and
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(g) the masculine, feminine or neuter genders used herein
shall include the masculine, feminine and neuter genders.
SECTION 8.06. GOVERNING LAW.
THIS GUARANTEE AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK. THE
GUARANTOR HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE UNITED STATES
DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND ANY COURT IN THE STATE
OF NEW YORK LOCATED IN THE CITY AND COUNTY OF NEW YORK IN ANY ACTION, SUIT OR
PROCEEDING BROUGHT AGAINST IT AND RELATED TO OR IN CONNECTION WITH THIS
GUARANTEE AGREEMENT OR THE TRANSACTIONS CONTEMPLATED THEREBY, AND TO THE EXTENT
PERMITTED BY APPLICABLE LAW, THE GUARANTOR HEREBY WAIVES AND AGREES NOT TO
ASSERT BY WAY OF MOTION, AS A DEFENSE OR OTHERWISE IN ANY SUCH SUIT, ACTION OR
PROCEEDING, ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF
SUCH COURTS, THAT THE SUIT, ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT
FORUM, THAT THE VENUE OF THE SUIT, ACTION OR PROCEEDING IS IMPROPER, OR THAT
THIS GUARANTEE AGREEMENT OR ANY DOCUMENT OR ANY INSTRUMENT REFERRED TO HEREIN OR
THE SUBJECT MATTER HEREOF MAY NOT BE LITIGATED IN OR BY SUCH COURTS. THE
GUARANTOR AGREES THAT SERVICE OF PROCESS MAY BE MADE UPON IT BY CERTIFIED OR
REGISTERED MAIL TO THE ADDRESS FOR NOTICES SET FORTH IN THIS GUARANTEE AGREEMENT
OR ANY METHOD AUTHORIZED BY THE LAWS OF NEW YORK.
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
[THIS SPACE INTENTIONALLY LEFT BLANK]
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THIS GUARANTEE AGREEMENT is executed as of the day and year first above
written.
D.R. HORTON, INC.
By: ________________________________
Name:
Title:
AMERICAN STOCK TRANSFER & TRUST
COMPANY
as Trustee
By: ________________________________
Name:
Title:
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