SEVENTH SUPPLEMENTAL INDENTURE

Exhibit 4.1

     

D.R. HORTON, INC.,

THE GUARANTORS PARTY HERETO,

and

AMERICAN STOCK TRANSFER & TRUST COMPANY,
as
Trustee

SEVENTH SUPPLEMENTAL INDENTURE

Dated as of June 4, 2008

Supplementing the Indenture
Dated as of September 11, 2000
with respect to the
9.75% Senior Subordinated Notes Due 2010

     THIS SEVENTH SUPPLEMENTAL INDENTURE, (this “Seventh Supplemental Indenture”), dated as of June 4, 2008, by and among D.R. HORTON, INC., a Delaware corporation (the “Company”), the GUARANTORS party hereto (the “Guarantors”) and AMERICAN STOCK TRANSFER & TRUST COMPANY, as trustee (the “Trustee”), under the Indenture dated as of September 11, 2000 (the “Base Indenture”), as supplemented, by and among the Company, each of the guarantors party thereto and the Trustee.

RECITALS

     WHEREAS, the Company, the Guarantors and the Trustee are parties to the Base Indenture, as amended and supplemented by the First Supplemental Indenture, dated as of September 11, 2000 (the “First Supplemental Indenture”), the Third Supplemental Indenture, dated as of May 21, 2001 and effective as of March 31, 2001 (the “Third Supplemental Indenture”), the Fourth Supplemental Indenture, dated as of February 21, 2002 (the “Fourth Supplemental Indenture”), the Fifth Supplemental Indenture, dated as of January 23, 2006 (the “Fifth Supplemental Indenture”) and the Sixth Supplemental Indenture, dated as of June 13, 2006 (the “Sixth Supplemental Indenture”) (collectively, and together with this Seventh Supplemental Indenture, the “Indenture”), providing for the issuance by the Company from time to time of its senior subordinated debt securities to be issued in one or more series as the Indenture provides;

     WHEREAS, pursuant to the First Supplemental Indenture, the Company issued a series of Securities designated as its 9.75% Senior Subordinated Notes due 2010 (the “Notes”);

     WHEREAS, pursuant to the Third Supplemental Indenture, the Company caused certain additional Restricted Subsidiaries to guarantee the Notes for all purposes under the Indenture;

     WHEREAS, pursuant to the Fourth Supplemental Indenture, the Company caused certain additional Restricted Subsidiaries to guarantee the Notes for all purposes under the Indenture;

     WHEREAS, pursuant to the Fifth Supplemental Indenture, the Company caused certain additional Restricted Subsidiaries to guarantee the Notes for all purposes under the Indenture;

     WHEREAS, pursuant to the Sixth Supplemental Indenture, the Company caused certain additional Restricted Subsidiaries to guarantee the Notes for all purposes under the Indenture;

     WHEREAS, as of the date of this Seventh Supplemental Indenture, there are $113,500,000 aggregate principal amount of Notes outstanding under the Indenture;

     WHEREAS, pursuant to Section 10.02 of the Base Indenture, and subject to certain conditions, the Company, the Guarantors and the Trustee may amend or supplement the Indenture with the written consent of the Holders of at least a majority in principal amount of the outstanding Notes affected by the amendment;

     WHEREAS, the Company has offered to exchange a series of its senior notes for all of the outstanding Notes upon the terms and subject to the conditions set forth in the Offering

Memorandum and Consent Solicitation Statement, dated as of May 21, 2008, as the same may be further amended, supplemented or modified (the “Offer”);

     WHEREAS, the Offer is conditioned upon, among other things, the proposed amendments (the “Proposed Amendments”) to the Indenture set forth herein having been approved by the holders of at least a majority in aggregate principal amount of the Notes outstanding and not owned by the Company, any guarantor of the Notes or any affiliate of the Company (the “Requisite Consents”);

     WHEREAS, the Company has received and delivered to the Trustee the Requisite Consents to effect the Proposed Amendments under the Indenture and, therefore, upon execution and delivery of this Supplemental Indenture by all parties hereto, the Proposed Amendments will be effective within the meaning of Section 10.04 of the Base Indenture;

     WHEREAS, the execution of this Seventh Supplemental Indenture has been duly authorized by the Boards of Directors or other governing bodies of the Company and the Guarantors and all things necessary to make this Seventh Supplemental Indenture a legal, valid, binding and enforceable obligation of the Company and the Guarantors according to its terms have been done and performed;

     NOW THEREFORE, for and in consideration of the premises, the Company and the Guarantors covenant and agree with the Trustee as follows:

ARTICLE I.

AMENDMENTS TO THE INDENTURE

     From and after the date the consent payment is made to the Holders pursuant to the Offer (the “Settlement Date”):

     1.1 Covenant Amendments .

          (a) The following sections of the First Supplemental Indenture are deleted in their entirety and, in the case of each such section, replaced with the phrase “[Intentionally Omitted]”, and any and all references to such sections, whether direct or indirect, in any term, condition, limitation or other provision in the Indenture, are deleted, and such sections and references shall be of no further force or effect:

	•		Section 3.02 Limitations on Indebtedness.
	•		Section 3.04. Limitation on Restricted Payments.
	•		Section 3.05. Limitations on Transactions with Affiliates.

          (b) Section 3.09 of the First Supplemental Indenture is amended to read in its entirety as follows:

     Section 3.09. Limitations on Mergers, Consolidations and Sales of Assets .

     Neither the Company nor any Guarantor will consolidate or merge with or into, or sell, lease, convey or otherwise dispose of all or substantially all of its assets (including, without limitation, by way of liquidation or dissolution), or assign any of its obligations under the Notes, the Guarantees or this Indenture (as an entirety or substantially in one transaction or in a series of related transactions), to any Person (in each case other than in a transaction in which the Company or a Restricted Subsidiary is the survivor of a consolidation or merger, or the transferee in a sale, lease, conveyance or other disposition) unless: (i) the Person formed by or surviving such consolidation or merger (if other than the Company or the Guarantor, as the case may be), or to which such sale, lease, conveyance or other disposition or assignment will be made (collectively, the “Successor”), is a corporation or other legal entity organized and existing under the laws of the United States or any state thereof or the District of Columbia, and the Successor assumes by supplemental indenture in a form reasonably satisfactory to the Trustee all of the obligations of the Company or the Guarantor, as the case may be, under the Notes or a Guarantee, as the case may be, and the Indenture, (ii) immediately after giving effect to such transaction, no Default or Event of Default has occurred and is continuing, (iii) immediately after giving effect to such transaction and the use of any net proceeds therefrom, on a pro forma basis, the Consolidated Net Worth of the Company or the Successor (in the case of a transaction involving the Company), as the case may be, would be at least equal to the Consolidated Net Worth of the Company immediately prior to such transaction (exclusive of any adjustments to Consolidated Net Worth attributable to transaction costs). The foregoing provisions shall not apply to (i) a transaction involving the sale or disposition of Capital Stock of a Guarantor, or the consolidation or merger of a Guarantor, or the sale, lease, conveyance or other disposition of all or substantially all of the assets of a Guarantor, that in any such case results in such Guarantor being released from its Guarantee pursuant to the Indenture or (ii) a transaction the purpose of which is to change the state of incorporation of the Company or any Guarantor.

     1.2 Definitions Amendments .

          (a) Article Two of the First Supplemental Indenture is amended to delete in their entirety all terms and their respective definitions for which all references are eliminated in the Indenture as a result of the amendments set forth in Section 1.1 of this Seventh Supplemental Indenture, including without limitation the definitions of:

	•		Asset Acquisition
	•		Consolidated Cash Flow Available for Fixed Charges
	•		Consolidated Fixed Charge Coverage Ratio
	•		Consolidated Interest Expense
	•		Consolidated Interest Incurred
	•		Consolidated Net Income

	•		Credit Facilities
	•		Designation Amount
	•		Investments
	•		Mortgage Subsidiary
	•		Permitted Indebtedness
	•		Permitted Investment
	•		Public Equity Offering
	•		Qualified Stock
	•		Restricted Payment

          (b) The definition of “Acquired Indebtedness” in Article Two of the First Supplemental Indenture is amended in its entirety to read as follows:

     “ Acquired Indebtedness ” means (i) with respect to any Person that becomes a Restricted Subsidiary (or is merged into the Company or any Restricted Subsidiary) after the Issue Date, Indebtedness of such Person or any of its Subsidiaries existing at the time such Person becomes a Restricted Subsidiary (or is merged into the Company or any Restricted Subsidiary) that was not incurred in connection with, or in contemplation of, such Person becoming a Restricted Subsidiary (or being merged into the Company or any Restricted Subsidiary) and (ii) with respect to the Company or any Restricted Subsidiary, any Indebtedness expressly assumed by the Company or any Restricted Subsidiary in connection with the acquisition of any assets from another Person (other than the Company or any Restricted Subsidiary), which Indebtedness was not incurred by such other Person in connection with or in contemplation of such acquisition. Indebtedness incurred in connection with or in contemplation of any transaction described in clause (i) or (ii) of the preceding sentence shall not be deemed Acquired Indebtedness.

          (c) The definition of “Interest Protection Agreement” in Article Two of the First Supplemental Indenture is amended in its entirety to read as follows:

     “ 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.

          (d) The definition of “Permitted Liens” in Article Two of the First Supplemental Indenture is amended in its entirety to read as follows:

     “ Permitted Liens ” means: (1) Liens for taxes, assessments or governmental or quasi government charges or claims that (a) are not yet delinquent, (b) are being contested in good faith by appropriate proceedings and as to which appropriate reserves have been established or other provisions have been made in accordance with GAAP, if required, or (c) encumber solely property abandoned or in the process of being

abandoned, (2) statutory Liens of landlords and carriers’, warehousemen’s, mechanics’, suppliers’, materialmen’s, repairmen’s or other Liens imposed by law and arising in the ordinary course of business and with respect to amounts that, to the extent applicable, either (a) are not yet delinquent or (b) are being contested in good faith by appropriate proceedings and as to which appropriate reserves have been established or other provisions have been made in accordance with GAAP, if required, (3) Liens (other than any Lien imposed by the Employer Retirement Income Security Act of 1974, as amended) incurred or deposits made in the ordinary course of business in connection with workers’ compensation, unemployment insurance and other types of social security, (4) Liens incurred or deposits made to secure the performance of tenders, bids, leases, statutory obligations, surety and appeal bonds, developme