AGREEMENT AND PLAN OF MERGER

                                     between

                               D. R. HORTON, INC.

                                       and

                         CONTINENTAL HOMES HOLDING CORP.

                          Dated as of December 18, 1997
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                              TABLE OF CONTENTS
                                                                            Page

ARTICLE 1.  THE MERGER........................................................1
            1.1.     The Merger.  ............................................1
                     1.1.1.     Effective Time.  .............................1
                     1.1.2.     Closing.  ....................................2
            1.2.     Effective Time.  ........................................2
            1.3.     Effect of the Merger.  ..................................2
            1.4.     Certificate of Incorporation, By-Laws.  .................2
                     1.4.1.     Certificate of Incorporation.  ...............2
                     1.4.2.     By-Laws.  ....................................2
            1.5.     Directors and Officers.  ................................2

ARTICLE 2.  EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT
            CORPORATIONS; EXCHANGE OF CERTIFICATES............................3
            2.1.     Effect on Capital Stock.  ...............................3
                     2.1.1.     No Conversion of DRHI Common Stock.  .........3
                     2.1.2.     Cancellation of Certain Shares of
                                Company Common Stock.  .......................3
                     2.1.3.     Conversion of the Company Shares.  ...........3
                     2.1.4.     Stock Options.  ..............................4
                     2.1.5.     Adjustment of Exchange Ratio.  ...............4
                     2.1.6.     Convertible Notes.  ..........................5
                     2.1.7.     No Appraisal Rights.  ........................5
            2.2.     Exchange of Certificates.  ..............................5
                     2.2.1.     Exchange Agent.  .............................5
                     2.2.2.     Exchange Procedures.  ........................5
                     2.2.3.     Distribution with Respect to Unexchanged
                                Shares.  .....................................6
                     2.2.4.     No Further Ownership Rights in Company
                                Shares.  .....................................6
                     2.2.5.     No Fractional Shares.  .......................6
                     2.2.6.     Termination of Exchange Fund.  ...............7
                     2.2.7.     No Liability.  ...............................7
                     2.2.8.     Investment of Exchange Fund.  ................7
                     2.2.9.     Transfer Taxes.  .............................7

ARTICLE 3.  REPRESENTATIONS AND WARRANTIES OF THE COMPANY.....................8
            3.1.     Organization, Existence and Good Standing of the
                     Company.  ...............................................8
            3.2.     Organization, Existence and Good Standing of Company
                     Subsidiaries.  ..........................................8
                                       i
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                                                                            Page

            3.3.     Capitalization.  ........................................9
                     3.3.1.     Capitalization of Company and Company
                                Subsidiaries..................................9
                     3.3.2.     Obligations to Issue Capital Stock of
                                Company or Company Subsidiaries.  ............9
            3.4.     Authority Relative to this Agreement;
                     Recommendation.  .......................................10
            3.5.     Company Material Contracts.  ...........................10
            3.6.     No Conflict.  ..........................................10
            3.7.     Required Filings and Consents.  ........................11
            3.8.     Compliance.  ...........................................11
            3.9.     Permits.  ..............................................11
            3.10.    SEC Filings.  ..........................................11
            3.11.    Financial Statements.  .................................12
            3.12.    Absence of Certain Changes or Events.  .................12
            3.13.    No Undisclosed Liabilities.  ...........................12
            3.14.    Absence of Litigation.  ................................12
            3.15.    Employee Benefit Plans.  ...............................13
                     3.15.1.    Company Employee Plans.  ....................13
                     3.15.2.    Absence of Certain Events.  .................13
            3.16.    Labor Matters.  ........................................14
            3.17.    Restrictions on Business Activities.  ..................14
            3.18.    Real Property.  ........................................14
            3.19.    Taxes.  ................................................16
            3.20.    Intellectual Property.  ................................18
            3.21.    Environmental Matters.  ................................18
            3.22.    Interested Party Transactions.  ........................19
            3.23.    Insurance.  ............................................19
            3.24.    Opinions of Financial Advisors.  .......................19
            3.25.    Brokers.  ..............................................19
            3.26.    Section 203 of the Delaware Law; Arizona Corporate
                     Takeover Statute.  .....................................20
            3.27.    Tax Treatment; Pooling Matters.  .......................20
            3.28.    Affiliates.  ...........................................20
            3.29.    Pooling.  ..............................................20

ARTICLE 4.  REPRESENTATIONS AND WARRANTIES OF DRHI...........................20
            4.1.     Organization, Existence and Good Standing of DRHI.  ....20
            4.2.     Organization, Existence and Good Standing of the
                     DRHI Subsidiaries.  ....................................21
            4.3.     Capitalization.  .......................................21
                     4.3.1.     Capitalization of DRHI and the DRHI
                                Subsidiary.  ................................21
                     4.3.2.     Obligations to Issue Capital Stock of
                                DRHI or the DRHI Subsidiaries.  .............22
            4.4.     Authority Relative to this Agreement.  .................22
                                       ii
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                                                                            Page

            4.5.     DRHI Material Contracts.  ..............................22
            4.6.     No Conflict.  ..........................................22
            4.7.     Required Filings and Consents.  ........................23
            4.8.     Compliance.  ...........................................23
            4.9.     Permits.  ..............................................23
            4.10.    SEC Filings.  ..........................................23
            4.11.    Financial Statements.  .................................24
            4.12.    Absence of Certain Changes or Events.  .................24
            4.13.    No Undisclosed Liabilities.  ...........................24
            4.14.    Absence of Litigation.  ................................25
            4.15.    Employee Benefit Plans.  ...............................25
                     4.15.1.    DRHI Employee Plans.  .......................25
                     4.15.2.    Absence of Certain Events.  .................25
            4.16.    Labor Matters.  ........................................26
            4.17.    Restrictions on Business Activities.  ..................26
            4.18.    Real Property.  ........................................26
            4.19.    Taxes.  ................................................28
            4.20.    Intellectual Property.  ................................29
            4.21.    Environmental Matters.  ................................29
            4.22.    Insurance.  ............................................30
            4.23.    Brokers.  ..............................................30
            4.24.    DRHI Common Stock.  ....................................30
            4.25.    Tax Treatment; Pooling Matters.  .......................30
            4.26.    Investment Intent.  ....................................31
            4.27.    Sufficient Funds.  .....................................31
            4.28.    Pooling.  ..............................................31

ARTICLE 5.  CONDUCT OF BUSINESS PENDING THE MERGER...........................31
            5.1.     Conduct of Business by the Company Pending the
                     Merger.  ...............................................31
            5.2.     No Solicitation.  ......................................33
            5.3.     Conduct of Business by DRHI Pending the Merger.  .......35

ARTICLE 6.  ADDITIONAL AGREEMENTS............................................36
            6.1.     HSR Act.  ..............................................36
            6.2.     Access to Information; Confidentiality.  ...............36
            6.3.     Registration Statement.  ...............................37
            6.4.     Meetings of Stockholders.  .............................39
            6.5.     Pooling and Tax-Free Reorganization Treatment.  ........39
            6.6.     Affiliate and Pooling Agreements.  .....................40
            6.7.     Company Stock Options.  ................................40
            6.8.     Board Representation.  .................................40
            6.9.     Publication of Combined Results.  ......................41
            6.10.    Indemnification and Insurance.  ........................41
            6.11.    Notification of Certain Matters.  ......................42
            6.12.    Further Action.  .......................................42
                                      iii
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                                                                            Page

            6.13.    Public Announcements.  .................................42
            6.14.    Employee Benefits.  ....................................42

ARTICLE 7.  TERMINATION, AMENDMENT AND WAIVER................................43
            7.1.     Termination.  ..........................................43
            7.2.     Effect of Termination.  ................................44

ARTICLE 8.  CONDITIONS TO CLOSING............................................45
            8.1.     Mutual Conditions.  ....................................45
                     8.1.1.     No Injunctions or Restraints; Illegality.  ..45
                     8.1.2.     Governmental Actions.  ......................45
                     8.1.3.     HSR Act.  ...................................45
                     8.1.4.     Company Stockholder Approval.  ..............45
                     8.1.5.     DRHI Stockholder Approval.  .................45
                     8.1.6.     Listing.  ...................................46
                     8.1.7.     Registration Statement.  ....................46
                     8.1.8.     Consents.  ..................................46
            8.2.     Conditions to Obligations of DRHI.  ....................46
            8.3.     Conditions to Obligations of the Company.  .............47

ARTICLE 9.  GENERAL PROVISIONS...............................................47
            9.1.     Expenses.  .............................................47
            9.2.     Effectiveness of Representations, Warranties,
                     Covenants and Agreements.  .............................49
            9.3.     Notices.  ..............................................49
            9.4.     Certain Definitions.  ..................................49
            9.5.     Amendment.  ............................................51
            9.6.     Waiver.  ...............................................51
            9.7.     Headings.  .............................................51
            9.8.     Severability.  .........................................51
            9.9.     Entire Agreement.  .....................................51
            9.10.    Assignment.  ...........................................51
            9.11.    Parties in Interest.  ..................................52
            9.12.    Failure or Indulgence Not Waiver; Remedies
                     Cumulative.  ...........................................52
            9.13.    Governing Law.  ........................................52
            9.14.    Counterparts.  .........................................52

Exhibit 6.6          Forms of Agreement regarding disposition of shares
                                       iv
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                                                                            Page

                            DEFINED TERMS

1997 Company Balance Sheet...................................................12
1997 DRHI Balance Sheet......................................................24

affiliate....................................................................49
Agreement.....................................................................1
Antitrust Division...........................................................36

beneficial owner.............................................................50
Blue Sky Laws................................................................11
business day.................................................................50

Certificate of Merger.........................................................2
Certificates..................................................................5
Closing Date..................................................................2
Code..........................................................................1
Company.......................................................................1
Company Affiliates...........................................................20
Company Board.................................................................1
Company Common Stock..........................................................1
Company Disclosure Schedule...................................................8
Company Employee Plans.......................................................13
Company ERISA Affiliate......................................................13
Company Permits..............................................................11
Company SEC Reports..........................................................11
Company Shares................................................................1
Company Stock Plan............................................................4
Company Stockholder Meeting..................................................39
Company Subsidiary............................................................8
Confidentiality Letters......................................................36
control......................................................................50
Convertible Notes.............................................................5

Delaware Law..................................................................1
DLJ..........................................................................30
DRHI..........................................................................1
DRHI Common Stock.............................................................3
DRHI Disclosure Schedule.....................................................20
DRHI Employee Plans..........................................................25
DRHI ERISA Affiliate.........................................................25
DRHI Material Contracts......................................................22
DRHI Permits.................................................................23
DRHI Preferred Stock.........................................................21
DRHI SEC Reports.............................................................24
DRHI Shares...................................................................4
DRHI Stockholder Meeting.....................................................39
DRHI Subsidiary..............................................................21

Effective Time................................................................2
Environmental Law............................................................19
ERISA....................................................................13, 25
                                       v
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                                                                            Page

Exchange Act.................................................................10
Exchange Agent................................................................5
Exchange Fund.................................................................5
Exchange Ratio................................................................3

FTC..........................................................................36

Governmental Entity..........................................................11

Hazardous Substance..........................................................19
HSR Act......................................................................11

Indemnified Parties..........................................................41
IRS..........................................................................13

material adverse effect......................................................50
Material Contracts...........................................................10
Merger........................................................................1
Morgan Stanley...............................................................19
Mr. Anderson.................................................................40

Notice of Superior Proposal..................................................34
NYSE.........................................................................30

PBGC.........................................................................13
person.......................................................................50
Proxy Statement..............................................................37

Registration Statement.......................................................37

Salomon Smith Barney.........................................................19
SEC..........................................................................10
Securities Act...............................................................11
Stock Option..................................................................4
Stock Value...................................................................4
subsidiary...................................................................50
Superior Proposal............................................................35
Surviving Corporation.........................................................1

Tax..........................................................................16
Tax Returns..................................................................16
Taxes........................................................................16
Terminating Breach...........................................................43
Third Party..................................................................34
Third Party Acquisition......................................................34
trading day..................................................................51
Transfer Taxes................................................................8
                                       vi
<PAGE>
                          AGREEMENT AND PLAN OF MERGER

     AGREEMENT  AND  PLAN  OF  MERGER,  dated  as  of  December  18,  1997  (the
"Agreement"),  between D. R. HORTON, INC., a Delaware corporation ("DRHI"),  and
CONTINENTAL HOMES HOLDING CORP., a Delaware corporation (the "Company").

     WHEREAS,  the Board of  Directors of DRHI and the Board of Directors of the
Company (the  "Company  Board") have approved the merger of the Company with and
into DRHI (the "Merger") in accordance with the Delaware General Corporation Law
(the "Delaware Law"), upon the terms and conditions set forth in this Agreement,
whereby  each share of common  stock,  par value $.01 per share,  of the Company
(the "Company Common  Stock"),  not owned directly or indirectly by the Company,
will be converted  into the right to receive the merger  consideration  provided
for herein (the Company Common Stock may be sometimes hereinafter referred to as
the "Company Shares");

     WHEREAS,   each  of  DRHI  and  the   Company   desire   to  make   certain
representations,  warranties,  covenants and  agreements in connection  with the
Merger and also to prescribe various conditions to the Merger; and

     WHEREAS,  for federal  income Tax purposes,  it is intended that the Merger
shall  qualify as a  reorganization  under the  provisions of Section 368 of the
Internal Revenue Code of 1986, as amended (the "Code");

     NOW, THEREFORE,  in consideration of the premises, and the mutual covenants
and agreements contained herein, the parties hereto do hereby agree as follows:


                                   ARTICLE 1.

                                   THE MERGER

     1.1. The Merger.

               1.1.1.  Effective Time. At the Effective Time (as defined below),
          and subject to and upon the terms and conditions of this Agreement and
          the Delaware Law, the Company shall be merged with and into DRHI,  the
          separate  corporate  existence of the Company  shall  cease,  and DRHI
          shall  continue as the  surviving  corporation.  DRHI as the surviving
          corporation after the Merger is hereinafter  sometimes  referred to as
          the  "Surviving  Corporation."  The name of the Surviving  Corporation
          shall be D. R. Horton, Inc.

               1.1.2. Closing.  Unless this Agreement shall have been terminated
          and the  transactions  herein  contemplated  shall have been abandoned
          pursuant to Section 7.1. and subject to the  satisfaction or waiver of
          the conditions set forth in Article 8., the consummation of the Merger
          will take place as promptly as  practicable  (and in any event  within
          two business days) after satisfaction or waiver
                                       1
<PAGE>
          of the  conditions  set forth in Article 8., at the offices of Gibson,
          Dunn & Crutcher LLP, Dallas, Texas, unless another date, time or place
          is  agreed  to in  writing  by the  parties  hereto  (the  date of the
          consummation of the Merger being the "Closing Date").

     1.2.  Effective  Time. As promptly as practicable  (and in any event within
two business days) after the  satisfaction or waiver of the conditions set forth
in Article 8., the parties  hereto shall cause the Merger to be  consummated  by
filing  a  certificate  of  merger  as  contemplated  by the  Delaware  Law (the
"Certificate of Merger"), together with any required related certificates,  with
the  Secretary of State of the State of  Delaware,  in such form as required by,
and executed in  accordance  with the relevant  provisions  of, the Delaware Law
(the time of such filing being the "Effective Time").

     1.3. Effect of the Merger.  At the Effective Time, the effect of the Merger
shall be as  provided  in this  Agreement,  the  Certificate  of Merger  and the
applicable  provisions of the Delaware Law.  Without  limiting the generality of
the  foregoing,  and subject  thereto,  at the Effective  Time all the property,
rights, privileges,  powers and franchises of the Company and DRHI shall vest in
the Surviving Corporation,  and all debts, liabilities and duties of the Company
and DRHI  shall  become  the  debts,  liabilities  and  duties of the  Surviving
Corporation.

     1.4. Certificate of Incorporation, By-Laws.

               1.4.1.  Certificate of  Incorporation.  At the Effective Time the
          Certificate of Incorporation of DRHI, as in effect  immediately  prior
          to the Effective Time,  shall be the Certificate of  Incorporation  of
          the Surviving  Corporation until thereafter amended as provided by the
          Delaware Law and such Certificate of Incorporation.

               1.4.2.  By-Laws.  The  Bylaws of DRHI,  as in effect  immediately
          prior to the  Effective  Time,  shall be the  Bylaws of the  Surviving
          Corporation until thereafter  amended as provided by the Delaware Law,
          the Certificate of Incorporation of the Surviving Corporation and such
          Bylaws.

     1.5. Directors and Officers. The directors of DRHI immediately prior to the
Effective Time shall be the initial directors of the Surviving Corporation, each
to hold office in accordance with the Certificate of Incorporation and Bylaws of
the Surviving  Corporation,  subject to Section  6.8.,  and the officers of DRHI
shall be the initial officers of the Surviving  Corporation,  in each case until
their respective successors are duly elected or appointed and qualified.
                                       2
<PAGE>
                                   ARTICLE 2.

                EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
               CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES

     2.1.  Effect on Capital Stock.  As of the Effective  Time, by virtue of the
Merger and without any action on the part of DRHI,  the Company or any holder of
any of the following securities:

          2.1.1. No Conversion of DRHI Common Stock. Each share of common stock,
     par  value  $.01 per  share,  of DRHI  ("DRHI  Common  Stock")  issued  and
     outstanding  immediately  prior to the Effective  Time shall continue to be
     issued and  outstanding  DRHI Common  Stock.  Any DRHI Common Stock held in
     DRHI's treasury  immediately  prior to the Effective Time shall continue to
     be held in treasury of the Surviving Corporation at the Effective Time.

          2.1.2.  Cancellation  of Certain Shares of Company Common Stock.  Each
     Company  Share held in the treasury of the Company and each  Company  Share
     owned by DRHI or any direct or  indirect  wholly  owned  subsidiary  of the
     Company or DRHI  immediately  prior to the Effective Time shall cease to be
     outstanding,  be canceled and retired without payment of any  consideration
     therefor and cease to exist.

          2.1.3.  Conversion of the Company Shares.  At the Effective Time, each
     Company  Share (other than the Company  Shares to be canceled in accordance
     with  Section  2.1.2.),  issued and  outstanding  immediately  prior to the
     Effective  Time shall be converted  into the right to receive the number of
     shares of DRHI Common  Stock  determined  in  accordance  with this Section
     2.1.3. (the "Exchange Ratio").

               (a) If the Stock  Value is greater  than or equal to $16.878  and
          less than or equal to $18.776, the Exchange Ratio shall be 2.37.

               (b) If the Stock  Value is less than  $16.878  and  greater  than
          $14.50,  the  Exchange  Ratio  shall  equal the  quotient  obtained by
          dividing  $40.00  by the  Stock  Value  (rounded  to the  nearest  one
          thousandth).

               (c) If the Stock Value is more than $18.776 and less than $19.78,
          the  Exchange  Ratio  shall  equal the  quotient  obtained by dividing
          $44.50 by the Stock Value (rounded to the nearest one thousandth).

               (d) If the  Stock  Value is less  than or equal  to  $14.50,  the
          Exchange Ratio shall be 2.759;  provided that the Exchange Ratio shall
          equal the  quotient  obtained  by  dividing  $35.00 by the Stock Value
                                       3
<PAGE>
          (rounded  to the nearest  one  thousandth)  if the Stock Value is less
          than $12.69 and DRHI so elects as provided in Section 7.1.(f).

               (e) If the  Stock  Value is more  than or equal  to  $19.78,  the
          Exchange Ratio shall be 2.25.

               (f) The term  "Stock  Value"  means the  average  of the  closing
          prices of DRHI Common  Stock as reported  for New York Stock  Exchange
          Composite  Transactions  for 15 randomly  selected trading days within
          the 30  consecutive  trading  days  ending  on the  date  that is five
          trading  days  prior to the  Closing  Date.  The random  selection  of
          trading days shall be  supervised  jointly by the  financial  advisors
          retained  by  the  parties  in   connection   with  the   transactions
          contemplated hereby.

     All such shares of DRHI Common Stock shall be fully paid and  nonassessable
     and are hereinafter  sometimes  referred to as the "DRHI Shares." Upon such
     conversion,  all such Company  Shares shall be canceled and cease to exist,
     and each holder thereof shall cease to have any rights with respect thereto
     other than the right to receive DRHI Shares issued in exchange therefor and
     cash in lieu of  fractional  DRHI  Shares  in  accordance  with  the  terms
     provided herein.

          2.1.4.  Stock Options.  At the Effective Time, each outstanding option
     to purchase  Company  Common  Stock (a "Stock  Option")  granted  under the
     Company's  1988  Stock   Incentive  Plan  or  1986  Stock   Incentive  Plan
     (collectively,  the "Company Stock  Plans"),  whether or not then vested or
     exercisable,  shall be assumed by the Surviving Corporation,  in accordance
     with the terms of the Company  Stock Plan  pursuant to which it was granted
     and any stock  option  agreement by which it is  evidenced.  It is intended
     that the foregoing provisions shall be undertaken in a manner that will not
     constitute a  "modification"  as defined in Section 424 of the Code,  as to
     any stock option which is an "incentive stock option." Each Stock Option so
     assumed shall be exercisable for that number of shares of DRHI Common Stock
     equal to the number of the Company Shares subject thereto multiplied by the
     Exchange  Ratio,  and shall have an  exercise  price per share equal to the
     exercise price per Company Share divided by the Exchange Ratio.

          2.1.5.  Adjustment  of  Exchange  Ratio.  If after the date hereof and
     prior to the  Effective  Time  there  shall  have been a change in the DRHI
     Common Stock, by reason of a stock split (including a reverse split) of the
     DRHI Common Stock or a dividend  payable in the DRHI Common  Stock,  or any
     other  distribution  of securities to holders of the DRHI Common Stock with
     respect to their DRHI Common Stock  (including  without  limitation  such a
     distribution made in connection with a recapitalization,  reclassification,
     merger, consolidation, reorganization or similar transaction) or otherwise,
     then the  Exchange  Ratio and the dollar  amounts  set forth in clauses (a)
     through (f) of Section 2.1.3. shall be appropriately adjusted.
                                       4
<PAGE>
          2.1.6. Convertible Notes. At the Effective Time, each of the Company's
     6-7/8%  Convertible  Subordinated  Notes due March  2002 (the  "Convertible
     Notes") shall be convertible for that number of shares of DRHI Common Stock
     equal to the number of the Company Shares into which the Convertible  Notes
     are then convertible multiplied by the Exchange Ratio.

          2.1.7. No Appraisal Rights.  The holders of the Company Shares and the
     holders of shares of DRHI Common  Stock shall not be entitled to  appraisal
     rights in respect of the Merger.

     2.2. Exchange of Certificates.

          2.2.1.  Exchange Agent.  Prior to the Effective Time, DRHI shall enter
     into an  agreement  with a bank or trust  company  designated  by DRHI (the
     "Exchange  Agent"),  providing  that DRHI shall  deposit  with the Exchange
     Agent as of the  Effective  Time,  for the  benefit  of the  holders of the
     Company Shares,  for exchange in accordance with this Section 2.2.  through
     the Exchange Agent, (i) certificates representing the shares of DRHI Common
     Stock issuable pursuant to Section 2.1. and (ii) cash in an amount equal to
     the aggregate amount required to be paid in lieu of fractional interests of
     DRHI Common Stock  pursuant to Section  2.2.5.  (such shares of DRHI Common
     Stock,  together with any dividends or  distributions  with respect thereto
     with a record  date after the  Effective  Time and the cash  referred to in
     clause (ii) of this Section  2.2.1.  being  hereinafter  referred to as the
     "Exchange Fund") in exchange for outstanding Company Shares.

          2.2.2. Exchange Procedures. As soon as practicable after the Effective
     Time,  the  Exchange  Agent  shall  mail  to each  holder  of  record  of a
     certificate or certificates  which  immediately prior to the Effective Time
     represented  outstanding Company Shares (the  "Certificates")  whose shares
     were converted into the right to receive the merger consideration  provided
     for in Section 2.1., (i) a letter of transmittal and (ii)  instructions for
     use  in  effecting  the  surrender  of the  Certificates  in  exchange  for
     certificates  representing shares of DRHI Common Stock. Upon surrender of a
     Certificate  for  cancellation  to the Exchange  Agent,  together with such
     letter of  transmittal,  duly  executed,  and such other  documents  as may
     reasonably  be  required  by  the  Exchange  Agent,   the  holder  of  such
     Certificate shall be entitled to receive in exchange therefor a certificate
     representing  that  number of whole  shares of DRHI  Common  Stock and cash
     which such holder has the right to receive  pursuant to the  provisions  of
     Sections 2.1. and 2.2. and the  Certificate so surrendered  shall forthwith
     be canceled. If any cash or any certificate  representing DRHI Shares is to
     be paid to or issued  in a name  other  than that in which the  Certificate
     surrendered in exchange therefor is registered,  a certificate representing
     the proper  number of shares of DRHI Common Stock may be issued to a person
     other than the  person in whose  name the  Certificate  so  surrendered  is
     registered,  if such Certificate shall be properly endorsed or otherwise be
     in proper form for transfer and the person  requesting  such payment  shall
     pay to the Exchange Agent any transfer or other Taxes required by reason of
     the issuance of shares of DRHI
                                       5
<PAGE>
     Common  Stock  to a  person  other  than  the  registered  holder  of  such
     Certificate  or establish to the  satisfaction  of the Exchange  Agent that
     such  Tax  has  been  paid  or is  not  applicable.  Until  surrendered  as
     contemplated by this Section 2.2., each Certificate  shall be deemed at any
     time after the Effective  Time to represent  only the right to receive upon
     such surrender the certificate representing shares of DRHI Common Stock and
     cash in lieu of any fractional  shares of DRHI Common Stock as contemplated
     by this  Section  2.2. No interest  will be paid or will accrue on any cash
     payable in lieu of any fractional shares of DRHI Common Stock.

          2.2.3.  Distribution with Respect to Unexchanged  Shares. No dividends
     or other distributions with respect to DRHI Common Stock with a record date
     after the Effective  Time shall be paid to the holder of any  unsurrendered
     Certificate  with  respect to the shares of DRHI Common  Stock  represented
     thereby and no cash payment in lieu of  fractional  shares shall be paid to
     any such holder  pursuant to Section  2.2.5.  until the  surrender  of such
     Certificate in accordance  with this Section 2.2.  Subject to the effect of
     applicable laws,  following surrender of any such Certificate,  there shall
     be paid to the holder of the certificates representing whole shares of DRHI
     Common Stock issued in exchange therefor, without interest, (i) at the time
     of such  surrender,  the amount of any cash payable in lieu of a fractional
     share of DRHI Common  Stock to which such  holder is  entitled  pursuant to
     Section 2.2.5.  and the amount of dividends or other  distributions  with a
     record date after the Effective Time  theretofore paid with respect to such
     whole shares of the DRHI Common Stock, and (ii) at the appropriate  payment
     date,  the amount of  dividends or other  distributions  with a record date
     after the  Effective  Time but prior to such  surrender  and with a payment
     date subsequent to such surrender payable with respect to such whole shares
     of DRHI Common Stock.  If any holder of converted  Company  Shares shall be
     unable to surrender such holder's  Certificates  because such  Certificates
     shall have been lost or destroyed,  such holder may deliver in lieu thereof
     an  affidavit  and  indemnity  bond in form and  substance  and with surety
     reasonably satisfactory to DRHI.

          2.2.4. No Further  Ownership  Rights in Company Shares.  All shares of
     DRHI Common Stock issued upon the surrender for exchange of Certificates in
     accordance  with the  terms of this  Article  2.  (including  any cash paid
     pursuant to Sections  2.2.3. or 2.2.5.) shall be deemed to have been issued
     and paid in full  satisfaction  of all  rights  pertaining  to the  Company
     Shares  theretofore  represented  by  such  Certificates.   If,  after  the
     Effective Time,  Certificates are presented to the Surviving Corporation or
     the Exchange Agent for any reason,  they shall be canceled and exchanged as
     provided in this Article 2., except as otherwise provided by law.

          2.2.5. No Fractional  Shares.  No  certificates or scrip  representing
     fractional  shares of DRHI Common Stock shall be issued upon the  surrender
     for exchange of Certificates,  and such fractional share interests will not
     entitle  the owner  thereof  to vote or to any rights of a  stockholder  of
     DRHI. Notwithstanding 
                                       6
<PAGE>
     any other  provision  of this  Agreement,  each  holder of  Company  Shares
     exchanged  pursuant to the Merger who would otherwise have been entitled to
     receive a fraction  of a share of DRHI  Common  Stock  (after  taking  into
     account all Certificates  delivered by such holder) shall receive,  in lieu
     thereof, cash (without interest) in an amount equal to such fractional part
     of a share of DRHI Common Stock  multiplied  by the per share closing price
     of DRHI Common  Stock on the date of the  Effective  Time (or, if shares of
     DRHI Common  Stock do not trade on such date,  the first date of trading of
     DRHI Common Stock after the Effective Time).  The parties  acknowledge that
     payment of the cash  consideration in lieu of issuing fractional shares was
     not  separately   bargained  for  consideration  but  merely  represents  a
     mechanical  rounding  off for purposes of  simplifying  the  corporate  and
     accounting  complexities which would otherwise be caused by the issuance of
     fractional shares.

          2.2.6.  Termination of Exchange Fund. Any portion of the Exchange Fund
     which  remains  undistributed  to the holders of the  Certificates  for six
     months after the  Effective  Time shall be delivered to DRHI,  upon demand,
     and any holders of the Certificates who have not theretofore  complied with
     this  Article 2.  shall  thereafter  look only to DRHI for  payment of DRHI
     Common Stock,  any cash in lieu of  fractional  shares of DRHI Common Stock
     and any dividends or distributions with respect to DRHI Common Stock.

          2.2.7.  No Liability.  None of DRHI, the Company or the Exchange Agent
     shall be liable to any person in respect of any shares of DRHI Common Stock
     (or  dividends  or  distributions  with  respect  thereto) or cash from the
     Exchange Fund  delivered to a public  official  pursuant to any  applicable
     abandoned  property,  escheat or similar law. If any Certificates shall not
     have been surrendered  prior to the end of the applicable  period after the
     Effective  Time under  escheat laws (or  immediately  prior to such earlier
     date  on  which  any  shares  of DRHI  Common  Stock,  any  cash in lieu of
     fractional  shares of DRHI Common Stock or any  dividends or  distributions
     with  respect to DRHI Common  Stock in respect of such  Certificates  would
     otherwise  escheat to or become the property of any  governmental  entity),
     any such  shares,  cash,  dividends  or  distributions  in  respect of such
     Certificates  shall, to the extent  permitted by applicable law, become the
     property  of the  Surviving  Corporation,  free and clear of all  claims or
     interest of any person previously entitled thereto.

          2.2.8.  Investment of Exchange  Fund.  The Exchange Agent shall invest
     any cash  included  in the  Exchange  Fund on a daily  basis as directed by
     DRHI. Any interest and other income resulting from such  investments  shall
     be paid to DRHI.

          2.2.9.  Transfer  Taxes.  DRHI and the Company shall  cooperate in the
     preparation,  execution  and filing of all returns,  applications  or other
     documents   regarding  any  real  property  transfer,   stamp,   recording,
     documentary  or other  taxes and any other  fees and  similar  taxes  which
     become  payable in connection  with the Merger other than transfer or stamp
     taxes payable in respect of transfers pursuant
                                       7
<PAGE>
     to the third sentence of Section 2.2.2.  (collectively,  "Transfer Taxes").
     From and  after the  Effective  Time,  DRHI  shall pay or cause to be paid,
     without deduction or withholding from any amounts payable to the holders of
     Company Shares, all Transfer Taxes.

                                   ARTICLE 3.

                  REPRESENTATIONS AND WARRANTIES OF THE COMPANY

     The Company  hereby  represents  and  warrants to DRHI that,  except as set
forth in written disclosure schedule delivered on or prior to the date hereof by
the Company to DRHI that is arranged in paragraphs corresponding to the numbered
and lettered  paragraphs  contained in this Article 3. (the "Company  Disclosure
Schedule"):

     3.1. Organization,  Existence and Good Standing of the Company. The Company
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware. The Company has all necessary corporate power and
authority  to own its  properties  and  assets and to carry on its  business  as
presently  conducted.  The Company is  qualified  to do business  and is in good
standing in each  jurisdiction  where the nature or  character  of the  property
owned,  leased or operated by it or the nature of the business  transacted by it
makes such qualification necessary,  except where the failure to be so qualified
or be in good standing would not have a Company  Material  Adverse  Effect.  The
Company has delivered to DRHI a complete and correct copy of its  Certificate of
Incorporation and Bylaws as amended to the date hereof.

     3.2.  Organization,  Existence and Good  Standing of Company  Subsidiaries.
Section  3.2.  of the  Company  Disclosure  Schedule  sets  forth  a list of all
subsidiaries  of the  Company (a  "Company  Subsidiary"),  the  jurisdiction  of
incorporation or organization,  as applicable,  of each Company Subsidiary,  the
type of each Company  Subsidiary,  the  percentage  of the Company's and Company
Subsidiaries'  ownership of the outstanding  voting stock of each such corporate
Company  Subsidiary,  the authorized and outstanding  capital stock of each such
corporate Company  Subsidiary,  and the type and percentage of the Company's and
Company Subsidiaries' ownership interest in each other Company Subsidiary.  Each
Company  Subsidiary  is  a  corporation,  business  trust,  general  or  limited
partnership  or limited  liability  company (as specified in Section 3.2. to the
Company  Disclosure  Schedule)  duly  organized,  validly  existing  and in good
standing  under  the  laws  of  the   jurisdiction  of  its   incorporation   or
organization,  as applicable.  Each Company  Subsidiary has all necessary entity
power  and  authority  to own its  properties  and  assets  and to  carry on its
business as  presently  conducted.  Each Company  Subsidiary  is qualified to do
business  and is in good  standing  in each  jurisdiction  where  the  nature or
character of the property  owned,  leased or operated by it or the nature of the
business transacted by it makes such qualification  necessary,  except where the
failure  to be so  qualified  or be in good  standing  would  not have a Company
Material Adverse Effect. Except for the Company  Subsidiaries,  the Company does
not, directly or indirectly,  own any equity interest in any other  corporation,
association, partnership, joint venture,
                                       8
<PAGE>
business organization or limited liability company or other entity, with respect
to which  interest  the Company or any  Company  Subsidiary  has  invested or is
required to invest $100,000 or more, excluding securities in any publicly traded
company  held for  investment  and  comprising  less  than five  percent  of the
outstanding voting securities of such company.

     3.3. Capitalization.

          3.3.1.  Capitalization  of  Company  and  Company  Subsidiaries.   The
     authorized  capital  stock of the  Company  consists  solely of  20,000,000
     shares of Company  Common Stock and  2,000,000  shares of preferred  stock,
     $.01 par value per share.  As of the date hereof:  (i) 6,863,686  shares of
     Company  Common  Stock were issued and  outstanding  and 217,845  shares of
     Company  Common  Stock were held in  treasury,  and no shares of  preferred
     stock were issued and  outstanding;  (ii) 834,345  shares of Company Common
     Stock were  reserved  for future  issuance  pursuant to  outstanding  stock
     options,  and (iii) 3,630,925  shares of Company Common Stock were reserved
     for future issuance in connection with the  Convertible  Notes.  All of the
     outstanding  shares of  Company  Common  Stock,  and all  shares of Company
     Common Stock which may be issued prior to the Effective  Time upon exercise
     of any option or conversion  right will be, validly issued,  fully paid and
     nonassessable and free of preemptive rights.  Except as set forth above, as
     of the date  hereof  there are  outstanding  no shares of capital  stock or
     other voting securities of the Company and no equity  equivalent  interests
     in the  ownership  or earnings of the Company or the Company  Subsidiaries.
     All  of the  outstanding  shares  of  capital  stock,  or  other  ownership
     interest,  of each Company  Subsidiary  is validly  issued,  fully paid and
     nonassessable,  and is owned by the Company or another  Company  Subsidiary
     free and clear of all security interests,  liens, claims, pledges,  charges
     or other encumbrances of any nature whatsoever.

          3.3.2.  Obligations  to Issue  Capital  Stock of  Company  or  Company
     Subsidiaries.  Section 3.3.2. of the Company Disclosure Schedule sets forth
     a true and  complete  list of all  outstanding  rights to purchase  Company
     Common  Stock,  the name of each  holder  thereof,  the  number  of  shares
     purchasable thereunder and the per share exercise or purchase price of each
     right.  Except  with  respect  to  the  Convertible  Notes,  there  are  no
     securities  of  the  Company  or  any  Company  Subsidiary  convertible  or
     exchangeable  for  shares  of  capital  stock or voting  securities  of the
     Company or any Company  Subsidiary,  no options,  warrants or other similar
     rights, agreements, arrangements or commitments of any character obligating
     the  Company  or any  Company  Subsidiary  to issue or sell any  shares  of
     capital stock of, or other equity  interests in, the Company or any Company
     Subsidiary.  There are no  obligations,  contingent  or  otherwise,  of the
     Company  or any  Company  Subsidiary  to  repurchase,  redeem or  otherwise
     acquire any shares of Company  Common  Stock or the capital  stock or other
     equity interest of any Company Subsidiary or to make any investment (in the
     form  of  a  loan,  capital  contribution  or  otherwise)  in  any  Company
     Subsidiary.
                                       9
<PAGE>
     3.4. Authority Relative to this Agreement;  Recommendation. The Company has
all  necessary  corporate  power and  authority  to  execute  and  deliver  this
Agreement  and to  perform  its  obligations  hereunder  and to  consummate  the
transactions  contemplated  hereby. The execution and delivery of this Agreement
by the  Company  and  the  consummation  by  the  Company  of  the  transactions
contemplated  hereby  have been duly and  validly  authorized  by all  necessary
corporate action, and no other corporate  proceedings on the part of the Company
are necessary to authorize this Agreement or to consummate the  transactions  so
contemplated  (other  than the  adoption of this  Agreement  by the holders of a
majority of the  outstanding  shares of Company Common Stock entitled to vote in
accordance with the Delaware Law and the Company's  Certificate of Incorporation
and Bylaws).  This Agreement has been duly and validly executed and delivered by
the Company and, assuming the due authorization,  execution and delivery by DRHI
constitutes a legal,  valid and binding  obligation  of the Company  enforceable
against  the  Company  in  accordance  with its  terms.  The  Company  Board has
unanimously resolved to recommend that the stockholders of the Company adopt and
approve this Agreement.

     3.5. Company  Material  Contracts.  Section 3.5. of the Company  Disclosure
Schedule sets forth a list of all agreements to which the Company or any Company
Subsidiary  is a party or by which  any of them is bound  which,  as of the date
hereof: (i) are required to be filed as "material contracts" with the Securities
and  Exchange  Commission  (the  "SEC")  pursuant  to  the  requirements  of the
Securities  Exchange Act of 1934, as amended (the  "Exchange  Act");  (ii) under
which the  consequences  of a default,  nonrenewal or  termination  would have a
Company  Material  Adverse Effect;  or (iii) pursuant to which payments might be
required or  acceleration of benefits may be required upon a "change of control"
of the  Company,  or upon  execution  of this  Agreement  by the  Company or the
performance  by the  Company of its  obligations  hereunder  (collectively,  the
"Material Contracts").

     3.6. No  Conflict.  The  execution  and  delivery of this  Agreement by the
Company does not, and the performance of this Agreement by the Company will not,
(i) conflict with or violate the Certificate of  Incorporation  or Bylaws of the
Company,  (ii)  conflict  with or  violate  any law,  rule,  regulation,  order,
judgment or decree  applicable  to the Company or any Company  Subsidiary  or by
which its or any of their respective  properties is bound or affected,  or (iii)
result in any breach of or constitute a default (or an event that with notice or
lapse of time or both would become a default) under, or impair the rights of the
Company or any  Company  Subsidiary  or alter the rights or  obligations  of any
third  party  under,  or give to others  any rights of  termination,  amendment,
acceleration or cancellation, or result in the creation of a lien or encumbrance
on any of the  properties  or assets of the  Company or any  Company  Subsidiary
pursuant to any note, bond, mortgage,  indenture,  contract,  agreement,  lease,
license,  permit,  franchise  or other  instrument  or  obligation  to which the
Company  or any  Company  Subsidiary  is a party or by which the  Company or any
Company  Subsidiary or any of their respective  properties is bound or affected,
except in any such case for any such conflicts,  violations,  breaches, defaults
or other occurrences that would not have a Company Material Adverse Effect.
                                       10
<PAGE>
     3.7.  Required  Filings and  Consents.  The  execution and delivery of this
Agreement by the Company does not, and the  performance of this Agreement by the
Company will not, require any consent, approval,  authorization or permit of, or
filing  with or  notification  to, any  governmental  or  regulatory  authority,
domestic or foreign, federal, state or local ("Governmental Entity"), except (i)
for applicable  requirements,  if any, of the Securities Act of 1933, as amended
(the  "Securities  Act"),  the Exchange Act,  state  securities  laws ("Blue Sky
Laws"),  the  pre-merger  notification  requirements  of  the  Hart-Scott-Rodino
Antitrust  Improvements  Act of 1976, as amended ("HSR Act"), and the filing and
recordation of appropriate merger or other documents as required by the Delaware
Law,   and  (ii)  where  the  failure  to  obtain  such   consents,   approvals,
authorizations or permits,  or to make such filings or notifications,  would not
prevent or delay  consummation of the Merger,  or otherwise prevent or delay the
Company from  performing  its  obligations  under this  Agreement,  or would not
otherwise have a Company Material Adverse Effect.

     3.8.  Compliance.  Neither the Company  nor any  Company  Subsidiary  is in
conflict  with,  or in default or violation of, (i) any law,  rule,  regulation,
order, judgment or decree applicable to the Company or any Company Subsidiary or
by which its or any of their respective  properties is bound or affected or (ii)
any note,  bond,  mortgage,  indenture,  contract,  agreement,  lease,  license,
permit,  franchise  or  other  instrument  or  obligation,  except  for any such
conflicts,  defaults  or  violations  which  would  not  individually  or in the
aggregate have a Company Material Adverse Effect.

     3.9.  Permits.  The Company and each Company  Subsidiary  hold all permits,
licenses, easements, variances, exemptions,  consents, certificates,  orders and
approvals from Governmental Entities necessary for the operation of the business
of the  Company  and  the  Company  Subsidiaries  as it is now  being  conducted
(collectively,  the  "Company  Permits"),  except where the failure to hold such
Company Permits would not have a Company  Material  Adverse Effect.  The Company
and the Company  Subsidiaries  are in  compliance  with the terms of the Company
Permits, except where the failure to so comply would not have a Company Material
Adverse Effect.

     3.10. SEC Filings.  The Company has filed all forms,  reports and documents
required to be filed by it with the SEC. The Company has made  available to DRHI
(i) its Annual  Reports on Form 10-K for the fiscal years ended May 31, 1996 and
1997,  (ii) its  Quarterly  Report on Form 10-Q for the period  ended August 31,
1997,  (iii)  all  proxy  statements  relating  to  the  Company's  meetings  of
stockholders (whether annual or special) held since June 1, 1996, (iv) all other
reports or registration statements (other than Reports on Form 10-Q not referred
to in clause (ii) above)  filed by the Company  with the SEC since June 1, 1996,
and (v) all  amendments  and  supplements  to all such reports and  registration
statements  filed by the Company with the SEC since June 1, 1996  (collectively,
the "Company  SEC  Reports").  The Company SEC Reports (i) were  prepared in all
material  respects in accordance with the  requirements of the Securities Act or
the  Exchange  Act,  as the case may be,  and (ii) did not at the time they were
filed  (or if  amended  or  superseded  by a  filing  prior  to the date of this
Agreement,  then on the date of such filing)  contain any untrue  statement of a
material fact or omit to state a material fact
                                       11
<PAGE>
required  to be stated  therein  or  necessary  in order to make the  statements
therein,  in the light of the  circumstances  under  which they were  made,  not
misleading.  None of the  Company  Subsidiaries  is  required to file any forms,
reports or other documents with the SEC.

     3.11. Financial Statements.  Each of the consolidated  financial statements
(including,  in each case, any related notes  thereto)  contained in the Company
SEC Reports was  prepared  in  accordance  with  generally  accepted  accounting
principles applied on a consistent basis throughout the periods involved (except
as may be  indicated  in the notes  thereto),  and each  fairly  presents in all
material  respects the  consolidated  financial  position of the Company and its
consolidated   subsidiaries   as  at  the  respective   dates  thereof  and  the
consolidated  statements  of income  and cash flows for the  periods  indicated,
except that the unaudited  interim  financial  statements were or are subject to
normal and recurring  year-end  adjustments.  The Company is in full  compliance
with Section 13(b)(2) of the Exchange Act.

     3.12.  Absence  of Certain  Changes  or Events.  Except as set forth in the
Company SEC Reports, since June 1, 1997, there has not occurred: (i) any Company
Material Adverse Effect or any event, change or effect which could reasonably be
expected to have a Company  Material  Adverse  Effect;  (ii) any  amendments  or
changes in the Certificate of Incorporation or Bylaws of the Company;  (iii) any
damage  to,  destruction  or loss of any  asset of the  Company  or any  Company
Subsidiary  (whether  or not  covered  by  insurance)  that would have a Company
Material  Adverse  Effect;  (iv)  any  material  change  by the  Company  in its
accounting methods, principles or practices; (v) any material revaluation by the
Company of any of its assets, including,  without limitation,  writing off notes
or accounts  receivable  other than in the ordinary course of business;  or (vi)
any action or event that would have  required  the  consent of DRHI  pursuant to
Section 5.1. had such action or event occurred after the date of this Agreement.

     3.13.  No  Undisclosed  Liabilities.  Neither  the  Company nor any Company
Subsidiary has any  liabilities  (absolute,  accrued,  contingent or otherwise),
except liabilities (a) in the aggregate adequately provided for in the Company's
balance sheet  (including  any related notes thereto) as of August 31, 1997 (the
"1997 Company Balance  Sheet"),  (b) incurred in the ordinary course of business
before the date of 1997 Company  Balance Sheet and not required under  generally
accepted  accounting  principles  to be reflected  on the 1997  Company  Balance
Sheet,  (c) disclosed in the Company SEC Reports,  or (d) incurred  since August
31, 1997 in the ordinary course of business  consistent with past practice or in
connection  with  this  Agreement,  that  would  not,  individually  or  in  the
aggregate, have a Company Material Adverse Effect.

     3.14.  Absence  of  Litigation.  Except  as set  forth in the  Company  SEC
Reports,  there are no claims,  actions,  suits,  proceedings or  investigations
pending or, to the knowledge of the Company,  threatened  against the Company or
any Company Subsidiary or any properties or rights of the Company or any Company
Subsidiary  before any court,  arbitrator  or  administrative,  governmental  or
regulatory  authority or body,  domestic or foreign,  that could  reasonably  be
expected to have a Company Material Adverse Effect or
                                       12
<PAGE>
that could  reasonably  be  expected  to prevent  or delay  consummation  of the
Merger,   or  otherwise  prevent  or  delay  the  Company  from  performing  its
obligations under this Agreement.

     3.15. Employee Benefit Plans.

          3.15.1.  Company  Employee  Plans.  Section  3.15.1.  of  the  Company
     Disclosure Schedule lists all employee pension plans (as defined in Section
     3(2) of the Employee  Retirement  Income  Security Act of 1974,  as amended
     ("ERISA")),  all  employee  welfare  plans (as  defined in Section  3(1) of
     ERISA)  and all other  bonus,  stock  option,  stock  purchase,  incentive,
     deferred compensation, supplemental retirement, severance and other similar
     fringe  or  employee  benefit  plans,  programs  or  arrangements,  and any
     employment,  executive  compensation,  consulting or severance  agreements,
     written or  otherwise,  for the benefit of, or relating to, any employee of
     or  consultant  to the  Company,  any  trade or  business  (whether  or not
     incorporated) which is a member of a controlled group including the Company
     or  which is under  common  control  with the  Company  (a  "Company  ERISA
     Affiliate")  within the meaning of Section 414 of the Code,  or any Company
     Subsidiary,  as well as each plan with  respect  to which the  Company or a
     Company ERISA  Affiliate  could incur liability under Section 4069 (if such
     plan has been or were  terminated)  or Section 4212 of ERISA  (collectively
     the  "Company  Employee  Plans").  There have been made  available  to DRHI
     copies of (i) each such  written  Company  Employee  Plan (other than those
     referred  to in  Section  4(b)(4) of ERISA),  (ii) the most  recent  annual
     report on Form 5500 series,  with  accompanying  schedules and attachments,
     filed with respect to each Company  Employee  Plan  required to make such a
     filing,  and (iii) the most recent  actuarial  valuation  for each  Company
     Employee Plan subject to Title IV of ERISA.

          3.15.2.  Absence of Certain Events.  (i) None of the Company  Employee
     Plans provides  retiree  medical or other retiree  welfare  benefits to any
     person  (other  than as  required  under  COBRA),  and none of the  Company
     Employee Plans is a "multiemployer plan" as such term is defined in Section
     3(37) of ERISA; (ii) there has been no non-exempt "prohibited transaction,"
     as such term is  defined in Section  406 of ERISA and  Section  4975 of the
     Code,  with respect to any Company  Employee Plan,  which would result in a
     Company  Material  Adverse Effect;  (iii) all Company Employee Plans are in
     compliance  with  the  requirements  prescribed  by any  and  all  statutes
     (including  ERISA  and  the  Code),   orders,  or  governmental  rules  and
     regulations  currently  in  effect  with  respect  thereto  (including  all
     applicable  requirements for notification to participants or the Department
     of Labor, the Pension Benefit Guaranty  Corporation (the "PBGC"),  Internal
     Revenue  Service (the "IRS") or Secretary of the Treasury)  except as would
     not  individually or in the aggregate  result in a Company Material Adverse
     Effect,  and the Company and each Company  Subsidiary  have  performed  all
     obligations  required to be performed by them under, and are not in default
     under or violation of any of the Company Employee Plans except as would not
     individually  or in the  aggregate  result  in a Company  Material  Adverse
     Effect;
                                       13
<PAGE>
     (iv) each Company Employee Plan intended to qualify under Section 401(a) of
     the Code and each trust  intended to qualify  under  Section  501(a) of the
     Code is the subject of a favorable  determination  letter from the IRS; (v)
     all contributions required to be made to any Company Employee Plan pursuant
     to Section 412 of the Code,  or the terms of the Company  Employee  Plan or
     any collective bargaining agreement,  have been made on or before their due
     dates;  (vi) with respect to each Company Employee Plan subject to Title IV
     of ERISA, no "reportable event" within the meaning of Section 4043 of ERISA
     (excluding any such event for which the 30 day notice  requirement has been
     waived  under the  regulations  to  Section  4043 of  ERISA)  nor any event
     described in Section 4062,  4063 or 4041 of ERISA has  occurred;  and (vii)
     neither the  Company nor any Company  ERISA  Affiliate  has  incurred,  nor
     reasonably  expects to incur,  any liability under Title IV of ERISA (other
     than  liability  for premium  payments to the PBGC  arising in the ordinary
     course).

     3.16.  Labor  Matters.  (i) There are no  controversies  pending or, to the
knowledge  of the  Company,  threatened,  between  the  Company  or any  Company
Subsidiary and any of their respective  employees,  which controversies have had
or could reasonably be expected to have a Company Material Adverse Effect;  (ii)
neither  the  Company  nor any  Company  Subsidiary  is a party to any  material
collective  bargaining  agreement or other labor union  contract  applicable  to
persons employed by the Company or any Company Subsidiary,  nor does the Company
know of any  activities or  proceedings  of any labor union to organize any such
employees;  and (iii) the Company has no knowledge  of any  strikes,  slowdowns,
work  stoppages,  lockouts,  or  threats  thereof,  by or  with  respect  to any
employees of the Company or any Company  Subsidiary  which could  reasonably  be
expected to have a Company  Material  Adverse  Effect.  To the  knowledge of the
Company,  as of the date  hereof,  no executive  or  management  employee of the
Company or any of the Company  Subsidiaries  intends to terminate his employment
in connection with the Merger.

     3.17. Restrictions on Business Activities. Except for this Agreement, there
is no agreement,  judgment, injunction, order or decree binding upon the Company
or any Company Subsidiary, or any affiliate thereof, which has or would have the
effect of  prohibiting  the  conduct of  business  by the Company or any Company
Subsidiary as currently  conducted,  except for any  prohibitions  as would not,
individually or in the aggregate, have a Company Material Adverse Effect.

     3.18. Real Property. The Company and the Company Subsidiaries have good and
marketable (or indefeasible, in jurisdictions where the term "marketable" is not
customarily  used) title in fee simple,  or will acquire good and marketable (or
indefeasible,  as the case may be)  title in fee  simple,  to the real  property
purported to be owned or optioned by them, free and clear of all liens,  charges
and  encumbrances,  except  liens for Taxes not yet due and such  liens or other
imperfections  of  title  as do not or will not  materially  interfere  with the
present use or intended  use by the  Company  and the  Company  Subsidiaries  or
materially  affect the value or marketing of the property  affected  thereby and
that do not,  individually or in the aggregate,  have a Company Material Adverse
                                       14
<PAGE>
Effect.  Neither the Company nor any Company Subsidiary has given, nor have they
received,  any  notice  that a  breach  or an event of  default  exists,  and no
condition  or event has  occurred  that with the giving of notice,  the lapse of
time, or both would  constitute a breach or event of default,  by the Company or
any Company  Subsidiary,  or to the  knowledge of the Company,  any other person
with respect to any agreements, arrangements,  contracts, covenants, conditions,
deeds,  deeds  of  trust,  rights-of-way,  easements,  mortgages,  restrictions,
surveys,  title insurance policies,  and other documents granting to the Company
or any Company Subsidiary title to or an interest in or otherwise  affecting the
real property  which is material to the operation of the business of the Company
and  the  Company  Subsidiaries,  as  presently  conducted  or  intended  to  be
conducted,  except  for  such  breach  or  event  of  default  that  would  not,
individually or in the aggregate,  have a Company  Material  Adverse Effect.  No
condemnation,  eminent domain, or similar  proceeding  exists, is pending or, to
the  knowledge  of the  Company,  is  threatened  with respect to, or that could
affect,  any real  property  owned  or  leased  by the  Company  or any  Company
Subsidiary that would  reasonably be expected to have a Company Material Adverse
Effect. There is no judgment,  injunction,  order, decree,  statute,  ordinance,
rule,  regulation,  moratorium,  or other action by a Governmental Entity, or to
the  knowledge  of  the  Company,  pending  before  or  being  considered  by  a
Governmental  Entity,  which has or would  have the  effect of  restricting  the
conduct of  business  by the  Company or any  Company  Subsidiary  as  currently
conducted or intended to be conducted by them,  except for any  restrictions  as
would not,  individually or in the aggregate,  have a Company  Material  Adverse
Effect. No  developer-related  charges or assessments by any public authority or
any other person for public  improvements or otherwise made against any property
developed by the Company or any Company  Subsidiary are unpaid (other than those
reflected on the Company Balance Sheet or incurred since the date of the Company
Balance Sheet in the ordinary course of the Company's  business  consistent with
past practices), except for charges or assessments as would not, individually or
in the aggregate,  have a Company Material Adverse Effect.  The real property of
the Company and the Company Subsidiaries to be used for homebuilding conform, in
all material respects, to the appropriate  governmental  authority's  standards,
and there is no material  impediment to approval for undeveloped  real property,
such approval to allow  development in the manner in which the Company currently
anticipates  building  thereon,  except for such as is not reasonably  likely to
result in a Company Material Adverse Effect.  The developed real property of the
Company and the Company Subsidiaries has access to streets, and is serviced,  in
all material respects,  by all utilities and other services,  as is necessary to
construct  homes on such  property,  and such  utilities and other  services are
adequate for the current and intended use of such property. The undeveloped real
property of the Company and the Company  Subsidiaries has access to streets, and
such real property is serviced,  in all material respects,  by all utilities and
other services,  as is necessary for the  development  thereof or such utilities
and other services are or will be available,  in all material respects,  to such
property.  All leases  pursuant to which the  Company or any Company  Subsidiary
leases from others  material  amounts of real or personal  property  are in good
standing,  valid and effective in accordance with their  respective  terms,  and
there is not under any of such leases,  any existing default or event of default
(or event which with notice or lapse of time, or both,
                                       15
<PAGE>
would  constitute  a  material  default),  except  where  the lack of such  good
standing,  validity and effectiveness or the existence of such defaults or event
of defaults would not, individually or in the aggregate, have a Company Material
Adverse Effect.

     3.19. Taxes.

     (a) For  purposes  of this  Agreement,  "Tax" or "Taxes"  shall mean Taxes,
fees, levies, duties, tariffs,  imposts, and governmental impositions or charges
of any kind,  in the nature of taxes,  payable to any federal,  state,  local or
foreign taxing authority,  including, without limitation, (i) income, franchise,
profits,  gross  receipts,  ad valorem,  net worth,  value  added,  sales,  use,
service, real or personal property, special assessments, capital stock, license,
payroll,  withholding,   employment,  social  security,  workers'  compensation,
unemployment  compensation,   utility,  severance,  production,  excise,  stamp,
occupation,  premiums,  windfall  profits,  transfer and gains  taxes,  and (ii)
interest, penalties,  additional taxes and additions to tax imposed with respect
thereto.  For purposes of this  Agreement,  "Tax  Returns"  shall mean  returns,
reports,  and information  statements with respect to Taxes required to be filed
with the IRS or any other  taxing  authority,  domestic or  foreign,  including,
without limitation, consolidated, combined and unitary tax returns.

     (b) (i) The Company and the Company Subsidiaries have duly and timely (with
     due regard to valid  extensions  properly  secured)  filed all Tax  Returns
     required  to be filed by them prior to the date of this  Agreement  (except
     where  failure to duly or timely file a Tax Return or to properly  secure a
     valid  extension  of time to file the same did not have a material  adverse
     effect on the Company or any of the Company Subsidiaries).  All Tax Returns
     so filed were true,  correct and complete in all material respects as filed
     (or  as  validly   amended   thereafter).   The  Company  and  the  Company
     Subsidiaries  have  timely  (with due regard to valid  extensions  properly
     secured)  paid in full all Taxes shown as due on all Tax  Returns  filed as
     described  above  (except where such failure to timely or fully pay any Tax
     or to  secure  a valid  extension  of time to pay the  same  did not have a
     material adverse effect on the Company or any of the Company Subsidiaries).

          (ii) None of the Tax  Returns  of the  Company  or any of the  Company
     Subsidiaries  contains a disclosure  statement  under  Section 6662 (or any
     predecessor  provision)  of the Code,  or any similar  provision  of state,
     local or foreign law.

          (iii) Neither the Company nor any of the Company Subsidiaries is aware
     of any  pending or (to the  knowledge  of any officer  thereof)  threatened
     action,  audit,  proceeding,  or  investigation  with  respect  to (A)  the
     assessment or collection of Taxes, (B) a claim by any Tax jurisdiction that
     the  Company or any  Company  Subsidiary  has been  required  to file a Tax
     Return,  but has  failed to do so, or (C) a claim  for  refund  made by the
     Company or any of the Company Subsidiaries with respect to Taxes previously
     paid, in any case that would have a material  adverse effect on the Company
     or any of the Company  Subsidiaries  if  ultimately  determined  adversely.
     Neither the Company nor any of the Company Subsidiaries
                                       16
<PAGE>
     has  requested  an  extension of time to file any Tax Return not yet filed,
     nor has been granted any waiver of any statute of limitations  with respect
     to, or any  extension  of a period for the  assessment  of, any Tax not yet
     paid, which extension or waiver would have a material adverse effect on the
     Company or any of the Company  Subsidiaries.  All Tax deficiencies formally
     asserted or assessed against the Company or any of the Company Subsidiaries
     in writing have been paid or finally settled or are being contested in good
     faith by appropriate action.

          (iv) All Taxes that were  required to be  collected or withheld by the
     Company or any of the  Company  Subsidiaries  have been duly  collected  or
     withheld,  and all  such  Taxes  that  the  Company  or any of the  Company
     Subsidiaries  were required to remit to any taxing authority have been duly
     remitted,  except where a failure to collect,  withhold or remit Taxes does
     not have a material  adverse  effect on the  Company or any of the  Company
     Subsidiaries.

          (v) Neither the Company nor any of the Company  Subsidiaries has filed
     a consent  pursuant to the  collapsible  corporation  provisions of Section
     341(f) of the Code or agreed to have  Section  341(f) (2) of the Code apply
     to any disposition of any asset owned by it.

          (vi)  Neither  the  Company  nor any of the  Company  Subsidiaries  is
     required to include in income any adjustment pursuant to Section 481 of the
     Code (or  similar  provisions  of other law or  regulation)  by reason of a
     change in  accounting  method,  nor does the  Company or any of the Company
     Subsidiaries  have any knowledge  that the IRS (or other taxing  authority)
     has proposed,  or (to the knowledge of any officer thereof) is considering,
     any such change in accounting  method,  except where any such  inclusion in
     income or any such change would not have a material  adverse  effect on the
     Company or any of the Company Subsidiaries.

          (vii) The  Company  has no  foreign  stockholders  for whom  shares of
     Company  Common  Stock and the  Convertible  Notes are United  States  real
     property interests as defined in Section 897 of the Code.

          (viii)  None  of the  assets  of  the  Company  or any of the  Company
     Subsidiaries  is  property  which is required to be treated as owned by any
     other  person  pursuant to the "safe  harbor  lease"  provisions  of former
     Section 168(f)(5)(B) of the Code.

          (ix)  Neither the Company  nor any of the  Company  Subsidiaries  is a
     party to, is bound by, or has any obligation  under, any Tax sharing or Tax
     indemnification  or similar  agreement or arrangement with any entity other
     than a corporation that is a member of an affiliated group currently filing
     a consolidated federal income tax return with the Company.
                                       17
<PAGE>
          (x)  Neither  the  Company  nor any of the  Company  Subsidiaries  has
     entered into any compensatory agreements with respect to the performance of
     services under which payment would result in a nondeductible expense to the
     Company or any of the Company  Subsidiaries  pursuant to Sections 162(m) or
     280G of the Code or an excise tax to the recipient of such payment pursuant
     to Section 4999 of the Code.

          (xi) The Company has made available to or provided to  representatives
     of DRHI copies of all federal and state income and  franchise  Tax Returns,
     and other written  correspondence with respect thereto (other than requests
     for extension of time to file returns and tax payment  vouchers),  filed or
     submitted  by the  Company  and  the  Company  Subsidiaries  with or to the
     relevant  taxing  authorities  with respect to all periods  beginning on or
     after May 31, 1994, and has produced for DRHI's inspection at the Company's
     headquarters all material sales tax, use tax, payroll tax, and property tax
     and information  returns filed by the Company and the Company  Subsidiaries
     with respect to such periods.

     3.20.  Intellectual Property. The Company and the Company Subsidiaries own,
or are  licensed or otherwise  possess  legally  enforceable  rights to use, all
patents,   trademarks,   trade  names,  service  marks,   copyrights,   and  any
applications  therefor,  technology,  know-how,  computer  software  programs or
applications,  and tangible or intangible  proprietary  information  or material
that are used in the  business of the Company  and the Company  Subsidiaries  as
currently conducted, except as would not, individually or in the aggregate, have
a Company Material Adverse Effect.

     3.21.  Environmental Matters. Except for such matters that, individually or
in the aggregate,  would not have a Company  Material  Adverse  Effect:  (a) the
Company  and  the  Company   Subsidiaries  have  complied  with  all  applicable
Environmental  Laws;  (b) the  properties  currently  owned or  operated  by the
Company or any Company Subsidiary (including soils, groundwater,  surface water,
buildings or other  structures) do not contain and, to the Company's  knowledge,
have not  previously  contained any  Hazardous  Substances;  (c) the  properties
formerly  owned or operated by the  Company or any  Company  Subsidiary  did not
contain any  Hazardous  Substances at any time during the period of ownership or
operation by the Company or the Company Subsidiary;  (d) neither the Company nor
any Company  Subsidiary  has  disposed of any  Hazardous  Substance on any third
party  property  which could  reasonably  be expected to result in any liability
under  Environmental Law; (e) neither the Company nor any Company Subsidiary has
released any  Hazardous  Substance  at any property  owned or operated by any of
them  which  could  reasonably  be  expected  to result in any  liability  under
Environmental  Law;  (f) neither the  Company  nor any  Company  Subsidiary  has
received any written notice,  demand,  letter,  claim or request for information
alleging  that the Company or any Company  Subsidiary  may be in violation of or
liable  under any  Environmental  Law;  (g)  neither the Company nor any Company
Subsidiary is a party to any orders, decrees, injunctions or agreements with any
Governmental  Entity or is a party to any indemnity or other  agreement with any
third  party  which is  expected  to result in  liability  on the Company or any
Company  Subsidiary under any Environmental Law; (h) there are no circumstances,
conditions or
                                       18
<PAGE>
activities involving the Company or any Company Subsidiary that could reasonably
be  expected to result in any  liability  or costs to the Company or any Company
Subsidiary or any restrictions on the ownership, use or transfer of any property
now owned by the Company or a Company  Subsidiary  pursuant to any Environmental
Law; and (i) to the knowledge of the Company,  none of the  properties now owned
or operated by the Company or any Company  Subsidiary  contains any  underground
storage   tanks,   asbestos-containing   material,   lead-based   products,   or
polychlorinated biphenyls.

     As used  herein,  "Environmental  Law" means any federal,  state,  local or
foreign law, regulation, rule, treaty, order, decree, permit, authorization,  or
the common law or any requirement of any governmental authority relating to: (A)
the  protection,  investigation  or restoration of the  environment,  or natural
resources;  (B) the handling,  use,  presence,  disposal,  release or threatened
release of any Hazardous  Substance;  or (C) noise, odor,  wetlands,  pollution,
contamination  or  injury  or threat of  injury  to  persons  or  property;  and
"Hazardous  Substance"  means any  substance  that is listed or regulated by any
Environmental    Law,   including   any   petroleum   product   or   by-product,
asbestos-containing material, lead-containing paint or plumbing, polychlorinated
biphenyls, radioactive materials or radon.

     3.22.  Interested Party Transactions.  Except as set forth in Section 3.22.
of the Company Disclosure Schedule or in the Company SEC Reports, since the date
of the Company's  proxy statement dated July 8, 1997, no event has occurred that
would  be  required  to  be  reported  as  a  Certain  Relationship  or  Related
Transaction, pursuant to Item 404 of Regulation S-K promulgated by the SEC.

     3.23.   Insurance.   The  Company  maintains   insurance  with  financially
responsible  insurance  companies in amounts customary in its industry to insure
it against  risks and losses  associated  with the operation of the business and
properties of the Company and the Company Subsidiaries.

     3.24.  Opinions of Financial  Advisors.  The Company Board has received the
opinion of the  Company's  financial  advisors,  Smith  Barney Inc.  and Salomon
Brothers  Inc  (collectively,  "Salomon  Smith  Barney")  and  the  non-employee
directors  have  received  the opinion of Morgan  Stanley & Co.,  Inc.  ("Morgan
Stanley"),  each to the  effect  that,  as of the  date of this  Agreement,  the
Exchange Ratio is fair from a financial point of view to such holders.

     3.25. Brokers.  No broker,  finder or investment banker (other than Salomon
Smith Barney and Morgan Stanley) is entitled to any brokerage, finder's or other
fee or commission  in  connection  with the  transactions  contemplated  by this
Agreement  based  upon  arrangements  made by or on behalf of the  Company.  The
Company has  heretofore  furnished  to DRHI a complete  and correct  copy of all
agreements  between  the Company and  Salomon  Smith  Barney and Morgan  Stanley
pursuant to which such firms  would be  entitled to any payment  relating to the
transactions contemplated hereunder.
                                       19
<PAGE>
     3.26.  Section 203 of the Delaware Law; Arizona Corporate Takeover Statute.
The Company  Board has taken all actions so that the  restrictions  contained in
Section 203 of the  Delaware  Law  applicable  to a "business  combination"  (as
defined in Section 203) will not apply to the execution, delivery or performance
of this Agreement or the consummation of the  transactions  contemplated by this
Agreement. The Company is not an "issuing public corporation" within the meaning
of the Arizona Corporate Takeover Statute.

     3.27.  Tax  Treatment;  Pooling  Matters.  Neither the Company  nor, to the
knowledge of the Company,  any of its affiliates has taken or agreed to take any
action that would prevent accounting for the business combination to be effected
by the Merger as a pooling of  interests  for  financial  reporting  purposes in
accordance with generally accepted accounting principles and rules,  regulations
and  interpretations  of the SEC, or preventing  the Merger from  constituting a
tax-free  reorganization  (except  with  respect  to  cash  received  in lieu of
fractional shares)  qualifying under Section 354(a)(1) and Section  368(a)(1)(A)
of the Code.

     3.28.  Affiliates.  Except for the directors and executive  officers of the
Company,  each of whom is listed in  Section  3.28.  of the  Company  Disclosure
Schedule,  there are no persons who, to the  knowledge  of the  Company,  may be
deemed to be  affiliates  of the Company  under Rule 145 of the  Securities  Act
("Company Affiliates").

     3.29. Pooling.  The Company has received a letter from Arthur Andersen LLP,
a copy of which has been  previously  delivered  to DRHI,  with  respect  to the
eligibility of the Company for "pooling of interests" accounting treatment.

                                   ARTICLE 4.

                     REPRESENTATIONS AND WARRANTIES OF DRHI

DRHI hereby  represents and warrants to the Company that, except as set forth in
the written disclosure schedule delivered on or prior to the date hereof by DRHI
to the Company that is arranged in paragraphs  corresponding to the numbered and
lettered  paragraphs   contained  in  this  Article  4.  (the  "DRHI  Disclosure
Schedule"):

     4.1.  Organization,  Existence  and  Good  Standing  of  DRHI.  DRHI  is  a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware.  DRHI has all necessary  corporate power and authority
to own its  properties  and assets  and to carry on its  business  as  presently
conducted.  DRHI is  qualified  to do business  and is in good  standing in each
jurisdiction  where the nature or  character of the  property  owned,  leased or
operated  by it or the  nature  of the  business  transacted  by it  makes  such
qualification  necessary,  except  where the failure to be so qualified or be in
good standing would not have a DRHI Material Adverse Effect.  DRHI has delivered
to the  Company  a  complete  and  correct  copy  of its  Amended  and  Restated
                                       20
<PAGE>
Certificate  of  Incorporation   and  Bylaws  as  most  recently   restated  and
subsequently amended to the date hereof.

     4.2.  Organization,  Existence and Good Standing of the DRHI  Subsidiaries.
Section  4.2.  of  the  DRHI  Disclosure  Schedule  sets  forth  a  list  of all
subsidiaries of DRHI (a "DRHI Subsidiary"), the jurisdiction of incorporation or
organization,  as  applicable,  of each DRHI  Subsidiary,  the type of each DRHI
Subsidiary, the percentage of DRHI's and the DRHI Subsidiaries' ownership of the
outstanding voting stock of each such corporate DRHI Subsidiary,  the authorized
and outstanding  capital stock of each such corporate DRHI  Subsidiary,  and the
type and percentage of DRHI's and the DRHI  Subsidiaries'  ownership interest in
each other DRHI  Subsidiary.  Each DRHI  Subsidiary is a  corporation,  business
trust, general or limited partnership or limited liability company (as specified
in  Section  4.2.  to the DRHI  Disclosure  Schedule)  duly  organized,  validly
existing  and in  good  standing  under  the  laws  of the  jurisdiction  of its
incorporation  or  organization,  as  applicable.  Each DRHI  Subsidiary has all
necessary  entity power and  authority to own its  properties  and assets and to
carry on its business as presently conducted.  Each DRHI Subsidiary is qualified
to do business and is in good standing in each jurisdiction  where the nature or
character of the property  owned,  leased or operated by it or the nature of the
business transacted by it makes such qualification  necessary,  except where the
failure to be so qualified or be in good standing would not have a DRHI Material
Adverse Effect.  Except for the DRHI  Subsidiaries,  DRHI does not,  directly or
indirectly,  own any  equity  interest  in any other  corporation,  association,
partnership,  joint venture,  business organization or limited liability company
or other entity,  with respect to which interest  DRHI, any DRHI  Subsidiary has
invested or is required to invest $100,000 or more,  excluding securities in any
publicly  traded  company  held for  investment  and  comprising  less than five
percent of the outstanding voting securities of such company.

     4.3. Capitalization.

          4.3.1.  Capitalization of DRHI and the DRHI Subsidiary. The authorized
     capital stock of DRHI  consists  solely of  100,000,000  shares of the DRHI
     Common Stock and 30,000,000  shares of preferred stock,  $.10 par value per
     share  ("DRHI  Preferred  Stock").  As of the date hereof:  (i)  37,352,663
     shares of the DRHI Common Stock were issued and  outstanding  and no shares
     of the DRHI Common Stock were held in treasury,  (ii)  2,853,924  shares of
     the DRHI  Common  Stock were  reserved  for  future  issuance  pursuant  to
     outstanding  stock options and (iii) no shares of the DRHI Preferred  Stock
     were  issued and  outstanding.  All of the  outstanding  shares of the DRHI
     Common  Stock,  and all shares of the DRHI Common Stock which may be issued
     prior to the Effective Time upon exercise of any option or conversion right
     will  be,  validly  issued,  fully  paid  and  nonassessable  and  free  of
     preemptive  rights.  Except as set forth above, as of the date hereof there
     are  outstanding  no shares of capital stock or other voting  securities of
     DRHI and no equity equivalent interest in the ownership or earnings of DRHI
     or the DRHI  Subsidiaries.  All of the outstanding shares of capital stock,
     or other  ownership  interest,  of each DRHI  Subsidiary is validly issued,
     fully paid
                                       21
<PAGE>
     and  nonassessable,  and is owned by DRHI or another DRHI Subsidiary,  free
     and clear of all security interests,  liens,  claims,  pledges,  charges or
     other encumbrances of any nature whatsoever.

          4.3.2.  Obligations  to  Issue  Capital  Stock  of  DRHI  or the  DRHI
     Subsidiaries.  Section 4.3.2. of the DRHI Disclosure  Schedule sets forth a
     true and  complete  list of all  outstanding  rights to  purchase  the DRHI
     Common Stock, the number of shares purchasable thereunder and the per share
     exercise,  conversion  or  purchase  price  of  each  right.  There  are no
     securities of DRHI or any DRHI Subsidiary  convertible or exchangeable  for
     shares  of  capital  stock  or  voting  securities  of  DRHI  or  any  DRHI
     Subsidiary,  no options,  warrants  or other  similar  rights,  agreements,
     arrangements  or commitments of any character  obligating  DRHI or any DRHI
     Subsidiary to issue or sell any shares of capital stock of, or other equity
     interests  in,  DRHI or any  DRHI  Subsidiary.  There  are no  obligations,
     contingent or  otherwise,  of DRHI or any DRHI  Subsidiary  to  repurchase,
     redeem or  otherwise  acquire  any shares of the DRHI  Common  Stock or the
     capital  stock or other equity  interest of any DRHI  Subsidiary or to make
     any investment (in the form of a loan,  capital  contribution or otherwise)
     in any DRHI Subsidiary.

     4.4. Authority Relative to this Agreement. DRHI has all necessary corporate
power and  authority  to execute and deliver this  Agreement  and to perform its
respective obligations hereunder and to consummate the transactions contemplated
hereby.   The  execution  and  delivery  of  this  Agreement  by  DRHI  and  the
consummation by DRHI of the transactions  contemplated hereby have been duly and
validly  authorized by all necessary  corporate  action,  and no other corporate
proceedings  on the part of DRHI are necessary to authorize this Agreement or to
consummate the  transactions  so  contemplated  (other than the adoption of this
Agreement  by the  holders of a majority of the  outstanding  shares of the DRHI
Common  Stock  entitled to vote in  accordance  with the Delaware Law and DRHI's
Amended and Restated  Certificate of Incorporation  and Bylaws).  This Agreement
has been duly and validly  executed and delivered by DRHI and,  assuming the due
authorization, execution and delivery by the Company, constitutes a legal, valid
and binding  obligation of DRHI enforceable  against DRHI in accordance with its
terms. The Board of Directors of DRHI has unanimously resolved to recommend that
the stockholders of DRHI adopt and approve this Agreement.

     4.5. DRHI Material Contracts.  Section 4.5. of the DRHI Disclosure Schedule
sets forth a list of all  agreements  to which DRHI or any DRHI  Subsidiary is a
party or by which any of them is bound  which,  as of the date  hereof:  (i) are
required  to be filed as  "material  contracts"  with  the SEC  pursuant  to the
requirements  of the  Exchange  Act or (ii) under  which the  consequences  of a
default,  nonrenewal or  termination  would have a DRHI Material  Adverse Effect
(collectively, the "DRHI Material Contracts").

     4.6. No Conflict. The execution and delivery of this Agreement by DRHI does
not, and the  performance  of this Agreement by DRHI will not, (i) conflict with
or violate the Amended and Restated  Certificate of  Incorporation  or Bylaws of
DRHI, (ii) conflict
                                       22
<PAGE>
with or violate any law, rule, regulation,  order, judgment or decree applicable
to DRHI or any  DRHI  Subsidiary  or by  which  its or any of  their  respective
properties is bound or affected,  or (iii) result in any breach of or constitute
a default (or an event that with notice or lapse of time or both would  become a
default) under, or impair the rights of DRHI or any DRHI Subsidiary or alter the
rights or obligations of any third party under,  or give to others any rights of
termination,  amendment,  acceleration  or  cancellation  of any  DRHI  Material
Contract,  or  result in the  creation  of a lien or  encumbrance  on any of the
properties or assets of DRHI or any DRHI Subsidiary  pursuant to any note, bond,
mortgage,  indenture,  contract, agreement, lease, license, permit, franchise or
other  instrument or obligation to which DRHI or any DRHI  Subsidiary is a party
or by which DRHI or any DRHI Subsidiary or any of their respective properties is
bound or affected,  except in any such case for any such conflicts,  violations,
breaches,  defaults  or other  occurrences  that would not have a DRHI  Material
Adverse Effect.

     4.7.  Required  Filings and  Consents.  The  execution and delivery of this
Agreement by DRHI does not, and the  performance  of this Agreement by DRHI will
not, require any consent,  approval,  authorization or permit of, or filing with
or  notification  to, any  governmental  or  regulatory  authority,  domestic or
foreign, except (i) for applicable requirements,  if any, of the Securities Act,
the Exchange Act, Blue Sky Laws, the pre-merger notification requirements of the
HSR Act, and the filing and recordation of appropriate merger or other documents
as  required  by the  Delaware  Law,  and (ii) where the  failure to obtain such
consents,  approvals,  authorizations  or  permits,  or to make such  filings or
notifications,  would  not  prevent  or delay  consummation  of the  Merger,  or
otherwise  prevent  or delay DRHI from  performing  its  obligations  under this
Agreement, or would not otherwise have a DRHI Material Adverse Effect.

     4.8. Compliance.  Neither DRHI nor any DRHI Subsidiary is in conflict with,
or in default or violation of, (i) any law, rule, regulation, order, judgment or
decree applicable to DRHI or any DRHI Subsidiary or by which its or any of their
respective  properties  is bound or affected or (ii) any note,  bond,  mortgage,
indenture,  contract,  agreement,  lease,  license,  permit,  franchise or other
instrument or obligation,  except in each case for any such conflicts,  defaults
or  violations  which would not  individually  or in the  aggregate  have a DRHI
Material Adverse Effect.

     4.9.  Permits.  DRHI and each DRHI Subsidiary  hold all permits,  licenses,
easements, variances, exemptions,  consents, certificates,  orders and approvals
from Governmental  Entities  necessary for the operation of the business of DRHI
and the DRHI Subsidiaries as it is now being conducted (collectively,  the "DRHI
Permits"),  except where the failure to hold such DRHI Permits  would not have a
DRHI Material Adverse Effect.  DRHI and the DRHI  Subsidiaries are in compliance
with the terms of the DRHI Permits,  except where the failure to so comply would
not have a DRHI Material Adverse Effect.

     4.10. SEC Filings. DRHI has filed all forms, reports and documents required
to be filed with the SEC.  DRHI has made  available  to  Company  (i) its Annual
Reports on Form 10-K for the fiscal  years  ended  September  30, 1996 and 1997,
(ii) its Proxy  Statement,  dated  December 12, 1997,  for its Annual Meeting of
Stockholders, (iii) all
                                       23
<PAGE>
proxy statements relating to DRHI's meetings of stockholders  (whether annual or
special)  held since  October 1, 1995,  (iv) all other  reports or  registration
statements  (other  than  Reports on Form 10-Q) filed by DRHI with the SEC since
October 1, 1995, and (v) all amendments and  supplements to all such reports and
registration  statements  filed  by DRHI  with the SEC  since  October  1,  1995
(collectively,  the "DRHI SEC Reports").  The DRHI SEC Reports (i) were prepared
in all material  respects in accordance with the  requirements of the Securities
Act or the  Exchange  Act, as the case may be, and (ii) did not at the time they
were filed (or if amended or  superseded  by a filing  prior to the date of this
Agreement,  then on the date of such filing)  contain any untrue  statement of a
material fact or omit to state a material fact required to be stated  therein or
necessary  in  order  to  make  the  statements  therein,  in the  light  of the
circumstances  under  which they were  made,  not  misleading.  None of the DRHI
Subsidiaries is required to file any forms,  reports or other documents with the
SEC.

     4.11. Financial Statements.  Each of the consolidated  financial statements
(including,  in each case, any related notes thereto)  contained in the DRHI SEC
Reports was prepared in accordance with generally accepted accounting principles
applied on a consistent  basis throughout the periods involved (except as may be
indicated  in the notes  thereto),  and each  fairly  presents  in all  material
respects  the  consolidated  financial  position  of DRHI  and its  consolidated
subsidiaries as at the respective dates thereof and the consolidated  statements
of income and cash flows for the periods  indicated,  except that the  unaudited
interim  financial  statements  were or are  subject  to  normal  and  recurring
year-end  adjustments.  DRHI is in full compliance with Section  13(b)(2) of the
Exchange Act.

     4.12. Absence of Certain Changes or Events. Except as set forth in the DRHI
SEC  Reports,  since  October  1,  1997,  there has not  occurred:  (i) any DRHI
Material  Adverse Effect or any action,  change or effect which could reasonably
be expected to have a DRHI  Material  Adverse  Effect;  (ii) any  amendments  or
changes  in the  Certificate  of  Incorporation  or  Bylaws of DRHI  (except  as
permitted  by Section  5.3.);  (iii) any damage to,  destruction  or loss of any
asset of DRHI or any DRHI Subsidiary  (whether or not covered by insurance) that
would have a DRHI Material  Adverse Effect;  (iv) any material change by DRHI in
its accounting methods, principles or practices; (v) any material revaluation by
DRHI of any of its assets, including,  without limitation,  writing off notes or
accounts  receivable other than in the ordinary course of business;  or (vi) any
action or event that would have required the consent of the Company  pursuant to
Section 5.3. had such action or event occurred after the date of this Agreement.

     4.13. No Undisclosed Liabilities.  Neither DRHI nor any DRHI Subsidiary has
any liabilities (absolute, accrued, contingent or otherwise), except liabilities
(a) in the aggregate  adequately  provided for in DRHI's  audited  balance sheet
(including  any related notes  thereto) as of September 30, 1997 (the "1997 DRHI
Balance Sheet"), (b) incurred in the ordinary course of business before the date
of the 1997  DRHI  Balance  Sheet  and not  required  under  generally  accepted
accounting  principles  to be  reflected  on the 1997 DRHI  Balance  Sheet,  (c)
disclosed in the DRHI SEC Reports,  or (d) incurred since  September 30, 1997 in
the ordinary course of business consistent with past practice or
                                       24
<PAGE>
incurred in connection with this Agreement,  that would not,  individually or in
the aggregate, have a DRHI Material Adverse Effect.

     4.14.  Absence of Litigation.  Except as set forth in the DRHI SEC Reports,
there are no claims, actions,  suits,  proceedings or investigations pending or,
to the knowledge of DRHI,  threatened against DRHI or any DRHI Subsidiary or any
properties or rights of DRHI or any DRHI Subsidiary before any court, arbitrator
or  administrative,  governmental or regulatory  authority or body,  domestic or
foreign, that would have a DRHI Material Adverse Effect or that could reasonably
be expected to prevent or delay consummation of the Merger, or otherwise prevent
or delay DRHI from performing its obligations under this Agreement.

     4.15. Employee Benefit Plans.

          4.15.1.  DRHI Employee Plans.  Section 4.15.1.  of the DRHI Disclosure
     Schedule  lists all employee  pension  plans (as defined in Section 3(2) of
     the Employee Retirement Income Security Act of 1974, as amended ("ERISA")),
     all  employee  welfare  plans (as defined in Section 3(1) of ERISA) and all
     other  bonus,   stock   option,   stock   purchase,   incentive,   deferred
     compensation,  supplemental retirement,  severance and other similar fringe
     or employee  benefit  plans,  programs or  arrangements  for the benefit of
     employees  generally  of  DRHI,  any  trade  or  business  (whether  or not
     incorporated)  which is a member of a controlled  group  including  DRHI or
     which is under common control with DRHI (a "DRHI ERISA  Affiliate")  within
     the meaning of Section 414 of the Code, or any DRHI Subsidiary,  as well as
     each plan with respect to which DRHI or a DRHI ERISA  Affiliate could incur
     liability under Section 4069 (if such plan has been or were  terminated) or
     Section 4212 of ERISA (collectively the "DRHI Employee Plans").  There have
     been made  available  to the Company  copies of (i) each such  written DRHI
     Employee Plan (other than those  referred to in Section  4(b)(4) of ERISA),
     (ii) the most recent annual report on Form 5500 series,  with  accompanying
     schedules  and  attachments,  filed with respect to each DRHI Employee Plan
     required  to make  such a  filing,  and  (iii)  the most  recent  actuarial
     valuation for each DRHI Employee Plan subject to Title IV of ERISA.

          4.15.2. Absence of Certain Events. (i) None of the DRHI Employee Plans
     provides  retiree medical or other retiree  welfare  benefits to any person
     (other than as required  under COBRA),  and none of the DRHI Employee Plans
     is a  "multiemployer  plan" as such term is  defined  in  Section  3(37) of
     ERISA; (ii) there has been no non-exempt "prohibited  transaction," as such
     term is defined in Section 406 of ERISA and Section 4975 of the Code,  with
     respect to any DRHI  Employee  Plan,  which would result in a DRHI Material
     Adverse  Effect;  (iii) all DRHI Employee Plans are in compliance  with the
     requirements  prescribed by any and all statutes  (including  ERISA and the
     Code),  orders or governmental  rules and  regulations  currently in effect
     with  respect   thereto   (including   all  applicable   requirements   for
     notification to  participants or the Department of Labor,  the PBGC, IRS or
     Secretary of the Treasury) except as would not individually or in
                                       25
<PAGE>
     the aggregate result in a DRHI Material  Adverse Effect,  and DRHI and each
     DRHI Subsidiary have performed all obligations  required to be performed by
     them under,  and are not in default  under or  violation of any of the DRHI
     Employee Plans except as would not  individually or in the aggregate result
     in a DRHI Material Adverse Effect; (iv) each DRHI Employee Plan intended to
     qualify under Section 401(a) of the Code and each trust intended to qualify
     under   Section   501(a)  of  the  Code  is  the  subject  of  a  favorable
     determination  letter from the IRS;  (v) all  contributions  required to be
     made to any DRHI  Employee Plan pursuant to Section 412 of the Code, or the
     terms of the DRHI Employee  Plan or any  collective  bargaining  agreement,
     have been made on or before their due dates; (vi) with respect to each DRHI
     Employee Plan, no "reportable  event" within the meaning of Section 4043 of
     ERISA (excluding any such event for which the 30 day notice requirement has
     been waived under the  regulations  to Section 4043 of ERISA) nor any event
     described in Section 4062,  4063 or 4041 of ERISA has  occurred;  and (vii)
     neither DRHI nor any DRHI ERISA  Affiliate  has  incurred,  nor  reasonably
     expects  to  incur,  any  liability  under  Title IV of ERISA  (other  than
     liability for premium payments to the PBGC arising in the ordinary course).

     4.16.  Labor  Matters.  Except as set forth in  Section  4.16.  of the DRHI
Disclosure Schedule: (i) there are no controversies pending or, to the knowledge
of  DRHI,  threatened,  between  DRHI or any  DRHI  Subsidiary  and any of their
respective  employees,  which  controversies  have  had or could  reasonably  be
expected to have a DRHI Material Adverse Effect;  (ii) neither DRHI nor any DRHI
Subsidiary is a party to any material collective  bargaining  agreement or other
labor  union  contract  applicable  to  persons  employed  by DRHI  or any  DRHI
Subsidiary,  nor does DRHI know of any  activities or  proceedings  of any labor
union to organize  any such  employees;  and (iii) DRHI has no  knowledge of any
strikes,  slowdowns,  work stoppages,  lockouts,  or threats thereof, by or with
respect to any employees of DRHI or any DRHI Subsidiary  which could  reasonably
be expected to have a DRHI Material Adverse Effect.

     4.17. Restrictions on Business Activities. Except for this Agreement, there
is no agreement,  judgment, injunction, order or decree binding upon DRHI or any
DRHI Subsidiary which has or would have the effect of prohibiting the conduct of
business by DRHI or any DRHI Subsidiary as currently  conducted,  except for any
prohibitions  as  would  not,  individually  or in  the  aggregate,  have a DRHI
Material Adverse Effect.

     4.18.  Real  Property.  DRHI  and  the  DRHI  Subsidiaries  have  good  and
marketable (or indefeasible, in jurisdictions where the term "marketable" is not
customarily  used) title in fee simple,  or will acquire good and marketable (or
indefeasible,  as the case may be)  title in fee  simple,  to the real  property
purported to be owned or optioned by them, free and clear of all liens,  charges
and  encumbrances,  except  liens for Taxes not yet due and such  liens or other
imperfections  of  title  as do not or will not  materially  interfere  with the
present  use or intended  use by DRHI and the DRHI  Subsidiaries  or  materially
affect the value or marketing of the property  affected thereby and that do not,
individually or in the aggregate,  have a DRHI Material Adverse Effect.  Neither
DRHI nor any DRHI Subsidiary has given, nor have they received,  any notice that
a breach or an event of
                                       26
<PAGE>
default  exists,  and no condition or event has occurred that with the giving of
notice,  the  lapse of  time,  or both  would  constitute  a breach  or event of
default, by DRHI or any DRHI Subsidiary,  or to the knowledge of DRHI, any other
person  with  respect to any  agreements,  arrangements,  contracts,  covenants,
conditions,  deeds,  deeds  of  trust,  rights-of-way,   easements,   mortgages,
restrictions, surveys, title insurance policies, and other documents granting to
DRHI or any DRHI  Subsidiary  title to or an interest in or otherwise  affecting
the real property which is material to the operation of the business of DRHI and
the DRHI  Subsidiaries,  as  presently  conducted  or intended to be  conducted,
except for such breach or event of default  that would not,  individually  or in
the aggregate,  have a DRHI Material Adverse Effect.  No  condemnation,  eminent
domain, or similar  proceeding  exists, is pending or, to the knowledge of DRHI,
is threatened with respect to, or that could affect,  any real property owned or
leased by DRHI or any DRHI Subsidiary that would  reasonably be expected to have
a DRHI Material Adverse Effect. There is no judgment, injunction, order, decree,
statute,  ordinance,  rule,  regulation,   moratorium,  or  other  action  by  a
Governmental  Entity,  or to the  knowledge  of DRHI,  pending  before  or being
considered  by a  Governmental  Entity,  which has or would  have the  effect of
restricting  the conduct of business by DRHI or any DRHI Subsidiary as currently
conducted or intended to be conducted by them,  except for any  restrictions  as
would  not,  individually  or in the  aggregate,  have a DRHI  Material  Adverse
Effect. No  developer-related  charges or assessments by any public authority or
any other person for public  improvements or otherwise made against any property
developed by DRHI or any DRHI  Subsidiary are unpaid (other than those reflected
on the DRHI Balance  Sheet or incurred  since the date of the DRHI Balance Sheet
in the  ordinary  course of DRHI's  business  consistent  with past  practices),
except  for  charges  or  assessments  as  would  not,  individually  or in  the
aggregate,  have a DRHI Material  Adverse Effect.  The real property of DRHI and
the DRHI  Subsidiaries  to be used for  homebuilding  conform,  in all  material
respects, to the appropriate governmental authority's standards, and there is no
material impediment to approval for undeveloped real property,  such approval to
allow  development  in the manner in which DRHI currently  anticipates  building
thereon,  except  for  such as is not  reasonably  likely  to  result  in a DRHI
Material  Adverse  Effect.  The  developed  real  property  of DRHI and the DRHI
Subsidiaries has access to streets,  and is serviced,  in all material respects,
by all utilities and other services,  as is necessary to construct homes on such
property, and such utilities and other services are adequate for the current and
intended use of such  property.  The  undeveloped  real property of DRHI and the
DRHI Subsidiaries has access to streets, and such real property is serviced,  in
all material respects,  by all utilities and other services, as is necessary for
the  development  thereof or such  utilities  and other  services are or will be
available,  in all material respects,  to such property.  All leases pursuant to
which DRHI or any DRHI Subsidiary leases from others material amounts of real or
personal  property are in good standing,  valid and effective in accordance with
their respective terms, and there is not under any of such leases,  any existing
default or event of default  (or event  which with  notice or lapse of time,  or
both, would constitute a material  default),  except where the lack of such good
standing,  validity and effectiveness or the existence of such defaults or event
of defaults would not,  individually  or in the aggregate,  have a DRHI Material
Adverse Effect.
                                       27
<PAGE>
     4.19. Taxes.

     (a) DRHI and the DRHI Subsidiaries have duly and timely (with due regard to
valid extensions properly secured) filed all Tax Returns required to be filed by
them prior to the date of this Agreement (except where failure to duly or timely
file a Tax Return or to properly  secure a valid  extension  of time to file the
same  did  not  have a  material  adverse  effect  on  DRHI  or any of the  DRHI
Subsidiaries).  All Tax Returns so filed were true,  correct and complete in all
material respects as filed (or as validly amended thereafter). DRHI and the DRHI
Subsidiaries have timely (with due regard to valid extensions  properly secured)
paid in full all Taxes shown as due on all Tax Returns filed as described  above
(except  where such  failure to timely or fully pay any Tax or to secure a valid
extension of time to pay the same did not have a material adverse effect on DRHI
or any of the DRHI Subsidiaries).

     (b)  None  of the Tax  Returns  of  DRHI  or any of the  DRHI  Subsidiaries
contains  a  disclosure   statement  under  Section  6662  (or  any  predecessor
provision) of the Code, or any similar provision of state, local or foreign law.

     (c) Neither DRHI nor any of the DRHI  Subsidiaries  is aware of any pending
or  (to  the  knowledge  of  any  officer  thereof)  threatened  action,  audit,
proceeding, or investigation with respect to (i) the assessment or collection of
Taxes, (ii) a claim by any Tax jurisdiction that DRHI or any DRHI Subsidiary has
been  required to file a Tax  Return,  but has failed to do so, or (iii) a claim
for refund made by DRHI or any of the DRHI  Subsidiaries  with  respect to Taxes
previously  paid, in any case that would have a material  adverse effect on DRHI
or any of the DRHI Subsidiaries if ultimately determined adversely. Neither DRHI
nor any of the DRHI  Subsidiaries has requested an extension of time to file any
Tax Return  not yet filed,  nor has been  granted  any waiver of any  statute of
limitations with respect to, or any extension of a period for the assessment of,
any Tax not yet paid,  which  extension or waiver would have a material  adverse
effect on DRHI or any of the DRHI  Subsidiaries.  All Tax deficiencies  formally
asserted or assessed  against  DRHI or any of the DRHI  Subsidiaries  in writing
have been  paid or  finally  settled  or are being  contested  in good  faith by
appropriate action.

     (d) All Taxes that were required to be collected or withheld by DRHI or any
of the DRHI  Subsidiaries  have been duly  collected or  withheld,  and all such
Taxes that DRHI or any of the DRHI  Subsidiaries  were  required to remit to any
taxing  authority  have been duly  remitted,  except where a failure to collect,
withhold or remit Taxes does not have a material  adverse  effect on DRHI or any
of the DRHI Subsidiaries.

     (e)  Neither  DRHI nor any of the DRHI  Subsidiaries  has  filed a  consent
pursuant to the collapsible corporation provisions of Section 341(f) of the Code
or agreed to have Section 341(f) (2) of the Code apply to any disposition of any
asset owned by it.

     (f) Neither DRHI nor any of the DRHI Subsidiaries is required to include in
income any adjustment pursuant to Section 481 of the Code (or similar provisions
of other law or regulation) by reason of a change in accounting method, nor does
DRHI or any of
                                       28
<PAGE>
the  DRHI  Subsidiaries  have  any  knowledge  that  the  IRS (or  other  taxing
authority)  has  proposed,  or (to the  knowledge  of any  officer  thereof)  is
considering,  any such  change  in  accounting  method,  except  where  any such
inclusion in income or any such change would not have a material  adverse effect
on DRHI or any of the DRHI Subsidiaries.

     (g) DRHI has no foreign  stockholders  for whom shares of DRHI Common Stock
are United States real property interests as defined in Section 897 of the Code.

     (h) None of the assets of DRHI or any of the DRHI  Subsidiaries is property
which is  required  to be treated as owned by any other  person  pursuant to the
"safe harbor lease" provisions of former Section 168(f)(5)(B) of the Code.

     (i) Neither DRHI nor any of the DRHI  Subsidiaries  is a party to, is bound
by, or has any  obligation  under,  any Tax  sharing or Tax  indemnification  or
similar agreement or arrangement within any entity other than a corporation that
is a member of an  affiliated  group  currently  filing a  consolidated  federal
income tax return with DRHI.

     (j) Neither  DRHI nor any of the DRHI  Subsidiaries  has  entered  into any
compensatory  agreements with respect to the performance of services under which
payment  would  result  in a  nondeductible  expense  to DRHI or any of the DRHI
Subsidiaries pursuant to Sections 162(m) or 280G of the Code or an excise tax to
the recipient of such payment pursuant to Section 4999 of the Code.

     (k)  DRHI has made  available  to or  provided  to  representatives  of the
Company  copies of all federal and state income and franchise  Tax Returns,  and
other  written  correspondence  with respect  thereto  (other than  requests for
extension of time to file returns and tax payment vouchers),  filed or submitted
by the DRHI and the DRHI Subsidiaries with or to the relevant taxing authorities
with respect to all periods  beginning on or after  September 30, 1994,  and has
produced for the Company's  inspection at DRHI's headquarters all material sales
tax, use tax,  payroll tax, and property tax and  information  returns  filed by
DRHI and the DRHI Subsidiaries with respect to such periods.

     4.20.  Intellectual  Property.  DRHI and the DRHI  Subsidiaries own, or are
licensed or otherwise  possess legally  enforceable  rights to use, all patents,
trademarks,  trade  names,  service  marks,  copyrights,  and  any  applications
therefor, technology,  know-how, computer software programs or applications, and
tangible or intangible proprietary  information or material that are used in the
business of DRHI and the DRHI  Subsidiaries  as currently  conducted,  except as
would  not,  individually  or in the  aggregate,  have a DRHI  Material  Adverse
Effect.

     4.21.  Environmental Matters. Except for such matters that, individually or
in the aggregate,  would not have a DRHI Material  Adverse Effect:  (a) DRHI and
the DRHI Subsidiaries have complied with all applicable  Environmental Laws; (b)
the  properties  currently  owned or  operated  by DRHI or any  DRHI  Subsidiary
(including soils, groundwater,  surface water, buildings or other structures) do
not  contain  and,  to  DRHI's  knowledge,  have not  previously  contained  any
Hazardous Substances; (c) the properties
                                       29
<PAGE>
formerly  owned or operated by DRHI or any DRHI  Subsidiary  did not contain any
Hazardous  Substances at any time during the period of ownership or operation by
DRHI or the DRHI  Subsidiary;  (d)  neither  DRHI nor any  DRHI  Subsidiary  has
disposed of any  Hazardous  Substance  on any third party  property  which could
reasonably be expected to result in any liability under any  Environmental  Law;
(e) neither DRHI nor any DRHI Subsidiary has released any Hazardous Substance at
any property owned or operated by any of them which could reasonably be expected
to result in any liability under any Environmental Law; (f) neither DRHI nor any
DRHI  Subsidiary  has  received any written  notice,  demand,  letter,  claim or
request for  information  alleging  that DRHI or any DRHI  Subsidiary  may be in
violation  of or liable  under any  Environmental  Law; (g) neither DRHI nor any
DRHI  Subsidiary is a party to any orders,  decrees,  injunctions  or agreements
with any  Governmental  Entity or is a party to any indemnity or other agreement
with any third party which is  expected  to result in  liability  on DRHI or any
DRHI Subsidiary  under any  Environmental  Law; (h) there are no  circumstances,
conditions  or  activities  involving  DRHI or any DRHI  Subsidiary  that  could
reasonably  be expected to result in any  liability or costs to DRHI or any DRHI
Subsidiary or any restrictions on the ownership, use or transfer of any property
now owned by DRHI or a DRHI Subsidiary  pursuant to any  Environmental  Law; and
(i) to the knowledge of DRHI,  none of the  properties  now owned or operated by
DRHI  or  any  DRHI   Subsidiary   contains  any   underground   storage  tanks,
asbestos-containing material, lead-based products, or polychlorinated biphenyls.

     4.22.  Insurance.  DRHI maintains  insurance with  financially  responsible
insurance  companies  in amounts  customary in its industry to insure it against
risks and losses associated with the operation of the business and properties of
DRHI and the DRHI Subsidiaries.

     4.23.  Brokers.  No  broker,   finder  or  investment  banker  (other  than
Donaldson,  Lufkin & Jenrette Securities Corporation ("DLJ")) is entitled to any
brokerage,   finder's  or  other  fee  or  commission  in  connection  with  the
transactions  contemplated by this Agreement based upon  arrangements made by or
on behalf of the Company.  DRHI has  heretofore  furnished to Company a complete
and correct copy of all  agreements  between DRHI and DLJ pursuant to which such
firm would be entitled to any payment relating to the transactions  contemplated
hereunder.

     4.24.  DRHI Common Stock.  On the Closing Date, DRHI will have a sufficient
number of  authorized  but unissued or treasury  shares of the DRHI Common Stock
available for issuance to the holders of the Company  Shares,  Stock Options and
Convertible Notes in accordance with the provisions of this Agreement.  The DRHI
Common Stock to be issued pursuant to this Agreement will, when so delivered, be
(i) duly and validly issued,  fully paid and  nonassessable,  and (ii) listed on
the New York Stock Exchange ("NYSE"), upon official notice of issuance.

     4.25. Tax Treatment; Pooling Matters. Neither DRHI nor, to the knowledge of
DRHI,  any of its  affiliates  has taken or agreed to take any action that would
prevent accounting for the business  combination to be effected by the Merger as
a pooling of
                                       30
<PAGE>
interests for financial reporting purposes in accordance with generally accepted
accounting principles and rules,  regulations and interpretations of the SEC, or
preventing the Merger from constituting a tax-free  reorganization  (except with
respect to cash received in lieu of fractional  shares) qualifying under Section
354(a)(1) and Section 368(a) of the Code.

     4.26. Investment Intent. DRHI is acquiring the Company Shares hereunder for
its own account and not with a view to the  distribution  or sale  thereof,  and
DRHI has no  understanding,  agreement,  or  arrangement  to  sell,  distribute,
partition or otherwise  transfer or assign all or any part of the Company Shares
to any other person.

     4.27.  Sufficient  Funds. At the Effective Time DRHI will have available to
it sufficient funds to satisfy the obligations of the Company as a result of the
Merger, if any, (i) to repurchase the Company's outstanding 10% Senior Notes due
April 2006 and (ii) under the Company's revolving and warehouse lines of credit.

     4.28. Pooling. DRHI has received a letter from Ernst & Young LLP, a copy of
which  has  been  previously  delivered  to the  Company,  with  respect  to the
eligibility of DRHI for "pooling of interests" accounting treatment.

                                   ARTICLE 5.

                     CONDUCT OF BUSINESS PENDING THE MERGER

     5.1.  Conduct of Business by the  Company  Pending the Merger.  The Company
covenants and agrees that, during the period from the date of this Agreement and
continuing  until  the  earlier  of the  termination  of this  Agreement  or the
Effective Time, unless DRHI shall otherwise agree in writing,  the Company shall
conduct its business and shall cause the businesses of the Company  Subsidiaries
to be conducted only in, and the Company and the Company  Subsidiaries shall not
take any  action  except  in,  the  ordinary  course of  business  in the manner
consistent  with past  practice.  The Company  shall use  reasonable  commercial
efforts to  preserve  substantially  intact  the  business  organization  of the
Company and the Company  Subsidiaries,  to keep  available  the  services of the
present  officers,  employees  and  consultants  of the  Company and the Company
Subsidiaries  and to preserve the present  relationships  of the Company and the
Company Subsidiaries with customers,  suppliers and other persons with which the
Company or any Company Subsidiary has significant business relations.  By way of
amplification  and not  limitation,  except as  contemplated  by this Agreement,
neither the Company nor any Company Subsidiary shall, during the period from the
date of this  Agreement and continuing  until the earlier of the  termination of
this  Agreement or the  Effective  Time,  directly or  indirectly  do any of the
following without the prior written consent of DRHI:

     (a)  except as set  forth in  Section  5.1.(a)  of the  Company  Disclosure
Schedule,  amend or otherwise  change the Certificate of Incorporation or Bylaws
of the Company or the organizational documents of any Company Subsidiary;
                                       31
<PAGE>
     (b) issue, sell, pledge, dispose of or encumber, or authorize the issuance,
sale, pledge,  disposition or encumbrance of, any shares of capital stock of any
class, or any options,  warrants,  convertible securities or other rights of any
kind to acquire any shares of capital  stock,  or any other  ownership  interest
(including, without limitation, any phantom interest) in the Company (except for
the  issuance  of shares of Company  Common  Stock  pursuant  to any  previously
granted Stock Option or upon conversion of the Convertible Notes);

     (c)  except as set  forth in  Section  5.1.(c)  of the  Company  Disclosure
Schedule,  sell, pledge, dispose of or encumber any assets of the Company or any
Company  Subsidiary,  except for (i) sales of assets in the  ordinary  course of
business in a manner consistent with past practice, (ii) disposition of obsolete
or worthless assets,  (iii) sales of immaterial assets not in excess of $100,000
individually, and (iv) liens on assets to secure purchase money and construction
financings in the ordinary  course of business  consistent with past practice or
arising under the Company's existing revolving and warehouse lines of credit and
other  encumbrances  entered into in the ordinary course of business  consistent
with past practice;

     (d) (i) declare,  set aside, make or pay any dividend or other distribution
(whether in cash,  stock or property or any  combination  thereof) in respect of
any of its capital  stock,  except for quarterly cash dividends not in excess of
$.05 per share paid in accordance  with past practice,  and except that a wholly
owned Company  Subsidiary may declare and pay a dividend or make advances to its
parent or the  Company,  (ii) split,  combine or  reclassify  any of its capital
stock or issue or authorize or propose the issuance of any other  securities  in
respect of, in lieu of or in  substitution  for shares of its capital stock,  or
(iii)  amend the terms or change  the  period of  exercisability  of,  purchase,
repurchase,  redeem or otherwise  acquire,  or permit any Company  Subsidiary to
purchase,  repurchase,  redeem  or  otherwise  acquire,  any of its  securities,
including,  without  limitation,  shares of Company  Common Stock or any option,
warrant or right,  directly or  indirectly,  to acquire shares of Company Common
Stock, or propose to do any of the foregoing;

     (e)  except as set  forth in  Section  5.1.(e)  of the  Company  Disclosure
Schedule,  (i) acquire (by merger,  consolidation,  or  acquisition  of stock or
assets) any corporation,  partnership or other business organization or division
thereof;  (ii)  incur  any  indebtedness  for  borrowed  money or issue any debt
securities  or assume,  guarantee or endorse or  otherwise  as an  accommodation
become  responsible  for, the  obligations of any person,  except under existing
lines of  credit  in the  ordinary  course  of  business  consistent  with  past
practice, or make any loans or advances (other than loans or advances to or from
direct or indirect  wholly owned  Company  Subsidiaries  or pursuant to existing
contracts or contracts for the  acquisition  or development of land entered into
in the ordinary course of business  consistent with past practice),  (iii) enter
into or amend any contract or  agreement,  other than in the ordinary  course of
business consistent with past practice,  that is or would be a Material Contract
or is otherwise material to the Company and the Company  Subsidiaries taken as a
whole;  or (iv) authorize any capital  expenditures  or purchase of fixed assets
(other than the purchase of land in the ordinary course of business consistent
                                       32
<PAGE>
with  past  practice)  which  are,  in the  aggregate,  in  excess  of  $100,000
individually or $1,000,000 in the aggregate;

     (f)  except as set  forth in  Section  5.1.(f)  of the  Company  Disclosure
Schedule or as may be required by law,  increase the compensation  payable or to
become payable to its officers or employees,  grant any severance or termination
pay to, or enter into any  employment or severance  agreement with any director,
officer  or  other  employee  of the  Company  or  any  Company  Subsidiary,  or
establish,  adopt, enter into or amend any collective bargaining,  bonus, profit
sharing,  thrift,   compensation,   stock  option,  restricted  stock,  pension,
retirement, deferred compensation,  employment,  termination, severance or other
plan,  agreement,  trust,  fund,  policy or  arrangement  for the benefit of any
current or former directors,  officers or employees,  except increases in annual
compensation for employees in the ordinary course  consistent with past practice
to the extent such  compensation  increases do not result in a material increase
in compensation expense to the Company;

     (g)  change   accounting   policies  or  procedures   (including,   without
limitation, procedures with respect to revenue recognition, payments of accounts
payable and collection of accounts receivable);

     (h) make any  material  Tax  election  inconsistent  with past  practice or
settle or compromise any material federal, state, local or foreign Tax liability
or agree to an  extension  of a  statute  of  limitations  with  respect  to any
material  amount of Tax,  except to the extent the amount of any such settlement
or compromise has been reserved for in the financial statements contained in the
Company SEC Reports filed prior to the date hereof; and

     (i)  take,  or agree to take,  any of the  actions  described  in  Sections
5.1.(a)  through  (h)  above,  or  any  action  which  would  make  any  of  the
representations  or warranties of the Company contained in this Agreement untrue
or  incorrect  in any  material  respect as  contemplated  hereby or prevent the
Company  from  performing  or cause the Company  not to perform in any  material
respect its covenants hereunder.

     5.2. No Solicitation.

     (a) The Company shall, and shall cause the Company Subsidiaries and its and
their respective officers, directors, employees,  representatives and agents to,
immediately  cease any discussions or negotiations with any parties with respect
to any Third Party  Acquisition (as defined  below).  The Company shall not, nor
shall the Company  authorize or permit any Company  Subsidiary  or any of its or
their respective officers, directors,  employees,  representatives or agents to,
directly  or  indirectly,   encourage,   solicit,  participate  in  or  initiate
discussions or  negotiations  with or provide any non-public  information to any
person or group (other than DRHI or any designees of DRHI)  concerning any Third
Party Acquisition;  provided, however, that (i) nothing herein shall prevent the
Company  Board from  taking  and  disclosing  to the  Company's  stockholders  a
position  contemplated by Rules 14d-9 and 14e-2  promulgated  under the Exchange
Act
                                       33
<PAGE>
with regard to any tender  offer;  and (ii) the Company may make  inquiry of and
participate  in  discussions  or  negotiations  with any person or group who has
submitted  after  the date  hereof  an  unsolicited  and  unencouraged  Superior
Proposal if, and to the extent,  the Company Board by requisite vote  determines
in its good faith judgment, after consultation with and based upon the advice of
outside legal counsel,  that it is required to do so in order to comply with its
fiduciary  duties.  The  Company  shall  promptly  notify  DRHI in the  event it
receives any proposal or inquiry concerning a Third Party Acquisition, including
the terms and conditions  thereof and the identity of the party  submitting such
proposal, and shall advise DRHI from time to time of the status and any material
developments concerning the same.

     (b) Except as set forth in this Section 5.2.(b) the Company Board shall not
withdraw its recommendation of the transactions  contemplated  hereby or approve
or recommend,  or cause the Company to enter into any agreement with respect to,
any Third Party Acquisition. Notwithstanding the foregoing, if the Company Board
by requisite vote determines in its good faith judgment, after consultation with
and based upon the advice of outside legal counsel, that it is required to do so
in order to comply with its fiduciary duties, the Company Board may withdraw its
recommendation of the transactions contemplated hereby or approve or recommend a
Superior Proposal,  but in each case only (i) after providing reasonable written
notice to DRHI (a "Notice of Superior  Proposal") advising DRHI that the Company
Board has  received a  Superior  Proposal,  specifying  the  material  terms and
conditions  of such  Superior  Proposal and  identifying  the person making such
Superior  Proposal  and (ii) if DRHI does not,  within  three  business  days of
DRHI's  receipt  of the Notice of  Superior  Proposal,  make an offer  which the
Company Board by requisite vote  determines in its good faith judgment (based on
the advice of a financial adviser of nationally recognized  reputation) to be as
favorable to the Company's  stockholders  as such Superior  Proposal;  provided,
however, that the Company shall not be entitled to enter into any agreement with
respect to a Superior  Proposal unless and until this Agreement is terminated by
its terms pursuant to Section 7.1. Any disclosure  that the Company Board may be
compelled  to make with  respect to the receipt of a proposal  for a Third Party
Acquisition in order to comply with its fiduciary  duties or Rule 14d-9 or 14e-2
will not  constitute  a violation  of this Section  5.2.(b)  provided  that such
disclosure states that no action will be taken by the Company Board with respect
to the withdrawal of its recommendation of the transactions  contemplated hereby
or the  approval  or  recommendation  of any Third Party  Acquisition  except in
accordance with this Section 5.2.(b).

     (c) For the purposes of this Agreement, "Third Party Acquisition" means the
occurrence of any of the following events: (i) the acquisition of the Company by
merger or  otherwise  by any person  (which  includes a "person" as such term is
defined  in  Section  13(d)(3)  of the  Exchange  Act)  other  than  DRHI or any
affiliate  thereof (a "Third  Party");  (ii) the acquisition by a Third Party of
more than 35% of the total  assets of the Company  and the Company  Subsidiaries
taken as a whole;  (iii) the  acquisition by a Third Party of 35% or more of the
outstanding Shares; (iv) the adoption by the Company of a plan of liquidation or
the declaration or payment of an extraordinary  dividend;  or (v) the repurchase
by the Company or any Company Subsidiary of more than 35% of the
                                       34
<PAGE>
outstanding Shares. For purposes of this Agreement,  a "Superior Proposal" means
any bona fide  proposal to acquire  directly  or  indirectly  for  consideration
consisting of cash and/or  securities  more than 50% of the Company  Shares then
outstanding or all or substantially  all the assets of the Company and otherwise
on terms which the Company Board by requisite vote  determines in its good faith
judgment  (based on the advice of a financial  adviser of nationally  recognized
reputation) to be more favorable to the Company's stockholders than the Merger.

     5.3.  Conduct of Business by DRHI Pending the Merger.  DRHI  covenants  and
agrees that,  during the period from the date of this  Agreement and  continuing
until the earlier of the  termination of this  Agreement or the Effective  Time,
unless the Company shall otherwise  agree in writing,  which agreement shall not
be unreasonably  withheld or delayed,  DRHI shall conduct its business and shall
cause the businesses of the DRHI  Subsidiaries to be conducted only in, and DRHI
and the DRHI  Subsidiaries  shall not take any action  except  in, the  ordinary
course of  business  in the  manner  consistent  with past  practice.  By way of
amplification  and not  limitation,  except as  contemplated  by this Agreement,
neither DRHI nor any DRHI Subsidiary  shall,  during the period from the date of
this  Agreement  and  continuing  until the earlier of the  termination  of this
Agreement or the Effective Time,  directly or indirectly do any of the following
without the prior  written  consent of the Company,  which  consent shall not be
unreasonably withheld or delayed:

     (a) amend or  otherwise  change the Amended  and  Restated  Certificate  of
Incorporation  or  Bylaws  of DRHI  other  than  incident  to a stock  split  or
combination;

     (b) (i) declare,  set aside, make or pay any dividend or other distribution
(whether in cash,  stock or property or any  combination  thereof) in respect of
any of its  capital  stock,  except for  quarterly  cash  dividends  paid out of
current  earnings  and stock  dividends  and  except  that a wholly  owned  DRHI
Subsidiary  may  declare  and  pay a  dividend  to its  parent  or  DRHI or (ii)
reclassify  any of its  capital  stock or  issue or  authorize  or  propose  the
issuance of any other  securities  in respect of, in lieu of or in  substitution
for shares of its capital stock;

     (c) (i) acquire  (by  merger,  consolidation,  or  acquisition  of stock or
assets) any corporation,  partnership or other business organization or division
thereof if such  transaction  would prevent or materially delay the consummation
of  the  transactions  contemplated  by  this  Agreement  or if  the  amount  of
consideration  paid exceeds the largest amount of consideration  paid by DRHI in
an acquisition prior to the date hereof;

     (d) issue any  shares of capital  stock of any class  (except  pursuant  to
stock options  issued under DRHI's stock option plans or in any stock  dividend)
in one  transaction  or series of related  transactions  if the shares so issued
constitute more than 15% of the  outstanding  shares of such class (after giving
effect to such issuance); and

     (e)  take,  or agree to take,  any of the  actions  described  in  Sections
5.3.(a)  through  (d)  above,  or  any  action  which  would  make  any  of  the
representations  or warranties  of DRHI  contained in this  Agreement  untrue or
incorrect in any material
                                       35
<PAGE>
respect as contemplated hereby or prevent DRHI from performing or cause DRHI not
to perform in any material respect its covenants hereunder.

                                   ARTICLE 6.

                              ADDITIONAL AGREEMENTS

     6.1. HSR Act. As promptly as practicable  after the date of this Agreement,
the Company and DRHI shall file  notifications  under the HSR Act in  connection
with the Merger and the  transactions  contemplated  hereby and  thereafter  use
reasonable  efforts to respond  as  promptly  as  practicable  to any  inquiries
received  from the  Federal  Trade  Commission  (the  "FTC")  and the  Antitrust
Division of the Department of Justice (the "Antitrust  Division") for additional
information  or  documentation  and to respond as promptly as practicable to all
inquiries  and  requests  received  from any  State  Attorney  General  or other
governmental authority in connection with antitrust matters.

     6.2. Access to Information; Confidentiality.

     (a) Upon  reasonable  notice  and  subject  to  restrictions  contained  in
confidentiality agreements to which such party is subject (from which such party
shall use reasonable efforts to be released), the Company shall (and shall cause
each Company  Subsidiary  to) afford to the  officers,  employees,  accountants,
counsel and other  representatives of DRHI reasonable access,  during the period
to the Effective Time, to all its properties, books, contracts,  commitments and
records and, during such period, the Company shall (and shall cause each Company
Subsidiary to) furnish promptly to DRHI all information concerning its business,
properties and personnel as such other party may reasonably request.

     (b) Upon  reasonable  notice  and  subject  to  restrictions  contained  in
confidentiality agreements to which such party is subject (from which such party
shall use reasonable  efforts to be released),  DRHI shall (and shall cause each
DRHI Subsidiary to) afford to the officers, employees,  accountants, counsel and
other representatives of the Company reasonable access, during the period to the
Effective Time, to all its properties, books, contracts, commitments and records
and,  during such period,  DRHI shall (and shall cause each DRHI  Subsidiary to)
furnish  promptly  to the  Company  all  information  concerning  its  business,
properties and personnel as such other party may reasonably request.

     (c) Each of DRHI and the  Company  shall  make  available  to the other the
appropriate   individuals   (including   attorneys,    accountants   and   other
professionals) for discussion of the other's business,  properties and personnel
as either DRHI or the Company may reasonably request. The Company and DRHI shall
keep all information obtained under this Section 6.2. confidential in accordance
with the terms of the  confidentiality  letters,  dated  November  17,  1997 and
December 4, 1997 (the "Confidentiality Letters"), between DRHI and the Company.
                                       36
<PAGE>
     6.3. Registration Statement.

     (a) DRHI  shall  prepare  and file  with the SEC and any  other  applicable
regulatory bodies, as soon as reasonably  practicable,  a Registration Statement
on Form S-4 with  respect to the shares of the DRHI Common Stock to be issued in
the  Merger   (together  with  any  amendments  or  supplements   thereto,   the
"Registration  Statement"),  and will otherwise  proceed promptly to satisfy the
requirements  of  the  Securities  Act,  including  Rule  145  thereunder.  Such
Registration  Statement shall contain a joint proxy statement of DRHI and of the
Company prepared by DRHI and the Company containing the information  required by
the Exchange Act (together  with any  amendments  or  supplements  thereto,  the
"Proxy  Statement").  DRHI shall use its  reasonable  best  efforts to cause the
Registration   Statement  to  be  declared   effective   and  to  maintain  such
effectiveness  until all of the shares of the DRHI Common Stock covered  thereby
have been distributed.  DRHI shall promptly amend or supplement the Registration
Statement to the extent  necessary in order to make the  statements  therein not
misleading or to correct any  statements  which have become false or misleading.
The Company and DRHI shall use their  reasonable  best efforts to have the Proxy
Statement  approved by the SEC under the  provisions  of the  Exchange  Act. The
Company and its counsel  shall be given a reasonable  opportunity  to review and
comment on the filings made pursuant to this Section 6.3.  prior to their filing
with the SEC and shall be provided  with any  comments  DRHI and its counsel may
receive from the SEC or its staff with respect to such  filings  promptly  after
receipt of such comments.

     (b) The  information  specifically  designated  as  being  supplied  by the
Company  for  inclusion  or  incorporation  by  reference  in  the  Registration
Statement  shall  not,  at the  time  the  Registration  Statement  is  declared
effective  or at the time the Proxy  Statement is first mailed to holders of the
Company Common Stock, contain any untrue statement of a material fact or omit to
state any material fact  required to be stated  therein or necessary in order to
make  the  statements  therein  not  misleading.  The  information  specifically
designated as being  supplied by the Company for inclusion or  incorporation  by
reference in the Proxy  Statement  shall not, at the date the Proxy Statement is
first mailed to holders of the Company  Common Stock and the DRHI Common  Stock,
contain any untrue  statement  of a material  fact or omit to state any material
fact required to be stated  therein or necessary in order to make the statements
therein,  in the light of the  circumstances  under  which  they are  made,  not
misleading.  If  at  any  time  prior  to  the  Effective  Time,  any  event  or
circumstance  relating to the Company,  or its officers or directors,  should be
discovered  by the  Company  which  should be set forth in an  amendment  to the
Registration Statement or a supplement to the Proxy Statement, the Company shall
promptly inform DRHI. All documents, if any, that the Company is responsible for
filing with the SEC in connection with the transactions contemplated hereby will
comply as to form and  substance in all material  respects  with the  applicable
requirements of the Securities Act and the rules and regulations  thereunder and
the Exchange Act and the rules and regulations thereunder.

    (c) The information specifically designated  as being  supplied  by DRHI for
inclusion or incorporation by reference in the Registration Statement shall not,
at the time 
                                       37
<PAGE>
the  Registration  Statement  is  declared  effective  or at the time the  Proxy
Statement  is first  mailed to holders of the Company  Common Stock and the DRHI
Common Stock,  contain any untrue  statement of a material fact or omit to state
any material  fact  required to be stated  therein or necessary in order to make
the statements therein not misleading.  The information  specifically designated
as being  supplied by DRHI for  inclusion or  incorporation  by reference in the
Proxy  Statement  shall not, at the date the Proxy  Statement is first mailed to
holders of the  Company  Common  Stock and the DRHI  Common  Stock,  contain any
untrue  statement of a material fact or omit to state any material fact required
to be stated  therein or necessary in order to make the statements  therein,  in
light of the circumstance  under which they are made, not misleading.  If at any
time prior to the Effective Time any event or  circumstance  relating to DRHI or
its officers or directors should be discovered by DRHI which should be set forth
in an amendment  to the  Registration  Statement  or a  supplement  to the Proxy
Statement,  DRHI shall promptly  inform the Company and shall promptly file such
amendment to the Registration Statement.  All documents that DRHI or the Company
is  responsible  for filing  with the SEC in  connection  with the  transactions
contemplated  herein  will  comply  as to form  and  substance  in all  material
respects with the  applicable  requirements  of the Securities Act and the rules
and  regulations  thereunder and the Exchange Act and the rules and  regulations
thereunder.

     (d) Prior to the Closing Date,  DRHI shall use its reasonable  best efforts
to cause the shares of the DRHI Common Stock to be issued pursuant to the Merger
to be registered or qualified  under all applicable Blue Sky Laws of each of the
states and territories of the United States, and to take any other actions which
may be necessary  to enable the DRHI Common  Stock to be issued  pursuant to the
Merger to be distributed in each such jurisdiction.

     (e)  Prior to the  Closing  Date,  DRHI  shall  file a  subsequent  listing
application  with the NYSE relating to the shares of the DRHI Common Stock to be
issued in connection  with the Merger,  and shall use reasonable best efforts to
cause such shares of the DRHI Common Stock to be listed, upon official notice of
issuance, prior to the Closing Date.

     (f) The Company shall furnish all  information  to DRHI with respect to the
Company  and  the  Company  Subsidiaries  as DRHI  may  reasonably  request  for
inclusion in the Registration Statement, the Proxy Statement and shall otherwise
cooperate with DRHI in the preparation and filing of such documents.

     (g) The Company shall use all reasonable  efforts to cause Arthur  Andersen
LLP to deliver a letter dated not more than five days prior to the date on which
the Registration Statement shall become effective (and updated to a date no more
than five days prior to the Closing  Date) and  addressed to itself and DRHI and
their  respective   Boards  of  Directors  in  form  and  substance   reasonably
satisfactory  to DRHI and  customary  in scope  and  substance  for  agreed-upon
procedures  letters  delivered by independent  public  accountants in connection
with  registration  statements and proxy statements  similar to the Registration
Statement and the Proxy Statement.
                                       38
<PAGE>
     (h) DRHI shall use all  reasonable  efforts  to cause  Ernst & Young LLP to
deliver a letter  dated  not more than five days  prior to the date on which the
Registration  Statement  shall become  effective  (and updated to a date no more
than five  days  prior to the  Closing  Date) and  addressed  to itself  and the
Company  and  their  respective  Boards  of  Directors  in  form  and  substance
reasonably  satisfactory to the Company and customary in scope and substance for
agreed-upon  procedures  letters delivered by independent  public accountants in
connection  with  registration  statements and proxy  statements  similar to the
Registration Statement and the Proxy Statement.

     6.4. Meetings of Stockholders.

     (a) The  Company  will  take all steps  necessary  in  accordance  with its
Certificate  of  Incorporation  and Bylaws to call,  give notice of, convene and
hold a meeting of its stockholders (the "Company  Stockholder  Meeting") as soon
as practicable  after the effectiveness of the Registration  Statement,  for the
purpose  of  approving  and  adopting  this   Agreement  and  the   transactions
contemplated hereby and for such other purposes as may be necessary. Unless this
Agreement  shall have been validly  terminated as provided  herein,  the Company
Board  (subject to the  provisions of Section 5.2. and Section  7.1.(d)  hereof)
will (i)  recommend  to its  stockholders  the  approval  and  adoption  of this
Agreement,  the  transactions  contemplated  hereby and any other  matters to be
submitted to the stockholders in connection  therewith,  to the extent that such
approval is required by applicable  law in order to consummate  the Merger,  and
(ii) use its  reasonable  good  faith  efforts  to obtain  the  approval  by its
stockholders of this Agreement and the transactions contemplated hereby.

     (b) DRHI will take all steps  necessary in accordance  with its Amended and
Restated  Certificate  of  Incorporation  and  By-Laws to call,  give notice of,
convene and hold a meeting of its stockholders (the "DRHI Stockholder  Meeting")
as soon as practicable  after the  effectiveness of the Registration  Statement,
for the purpose of approving  the issuance of the DRHI Shares upon  consummation
of the Merger and for such  other  purposes  as may be  necessary.  Unless  this
Agreement shall have been validly  terminated as provided  herein,  DRHI's Board
(i) will recommend to its  stockholders the approval of the issuance of the DRHI
Shares upon  consummation of the Merger and any other matters to be submitted to
the  stockholders in connection  therewith,  to the extent that such approval is
required by  applicable  law or the  requirements  of the NYSE in order to issue
such  shares,  and (ii) use its  reasonable  good  faith  efforts  to obtain the
approval by its stockholders of this Agreement and the transactions contemplated
hereby.

     6.5. Pooling and Tax-Free  Reorganization  Treatment.  Neither DRHI nor the
Company  shall take or cause to be taken any  action on or before the  Effective
Time, and DRHI agrees to use commercially reasonable best efforts not to take or
cause to be taken any action after the Effective  Time,  which would  disqualify
the Merger as a "pooling of interests"  for  accounting  purposes or which would
prevent the Merger from  constituting  a tax-free  reorganization  (except  with
respect to cash  received in lieu of  fractional  shares)  within the meaning of
Section 354(a)(1) and Section 368(a)(1)(A) of the Code.
                                       39
<PAGE>
     6.6. Affiliate and Pooling  Agreements.  DRHI and the Company will each use
their respective  reasonable efforts to cause each of their respective directors
and executive  officers and each of their  respective  "affiliates"  (within the
meaning of Rule 145 under the Securities  Act) to execute and deliver to DRHI as
soon as  practicable  an agreement in the form  attached  hereto as Exhibit 6.6.
relating to the  disposition of shares of the Company Common Stock and shares of
the DRHI  Common  Stock held by such  person  and the shares of the DRHI  Common
Stock issuable pursuant to this Agreement.

     6.7. Company Stock Options.

     (a) As soon as reasonably  practicable after the Effective Time, DRHI shall
deliver to the holders of the Stock Options  appropriate  notices  setting forth
such holders' rights  pursuant to the Company Stock Plans,  and any stock option
agreement  evidencing  such Stock Options which shall continue in full force and
effect on the same terms and conditions (subject to the adjustments  required by
Section  2.1.4.  or this Section 6.7.  after giving effect to the Merger and the
assumption of such options by DRHI as set forth herein) as in effect immediately
prior to the  Effective  Time.  DRHI shall  comply with the terms of the Company
Stock Plans and such  agreements  as so adjusted,  and shall use its  reasonable
efforts to ensure,  to the extent required by, and subject to the provisions of,
such plan or  agreements,  that the Stock Options  which  qualified as incentive
stock options prior to the Effective Time shall continue to qualify as incentive
stock options after the Effective Time.

     (b) DRHI shall take all corporate  action necessary to reserve for issuance
a  sufficient  number of  shares of the DRHI  Common  Stock  for  delivery  upon
exercise of the Stock Options  assumed by DRHI in accordance with Section 2.1.4.
As soon as practicable  after the Effective Time, DRHI shall file with the SEC a
registration  statement  on Form S-8 with  respect to shares of the DRHI  Common
Stock  subject to each such assumed  Stock  Option and shall use its  reasonable
efforts  to  maintain  the   effectiveness   of  a  registration   statement  or
registration  statements  covering such options (and maintain the current status
of the  prospectus or  prospectuses  contained  therein) for so long as such the
Stock Options remain outstanding.

     (c)  Except  to  the  extent  otherwise  agreed  to  by  the  parties,  all
restrictions  or  limitations  on transfer and vesting with respect to the stock
options,  to the extent that such  restrictions  or  limitations  shall not have
already  lapsed,  shall  remain in full  force and effect  with  respect to such
options  after  giving  effect to the Merger and the  assumption  by DRHI as set
forth above.

     6.8. Board Representation.  The Company hereby designates W. Thomas Hickcox
and Bradley S. Anderson  ("Mr.  Anderson")  for  appointment  or nomination  for
election  as  directors  of  DRHI.  Prior  to the  filing  of  the  Registration
Statement,  the Company may designate an individual in lieu of Mr.  Anderson for
such appointment or nomination; provided that the individual so designated shall
be reasonably acceptable to DRHI and satisfy the requirements of the NYSE for an
"independent"  and "outside"  director of DRHI  subsequent  to the Merger.  DRHI
shall use its best efforts, whether
                                       40
<PAGE>
through  increase in the size of its Board of Directors or  otherwise,  to cause
the appointment or election of the two such designated  individuals as directors
of DRHI at the Effective Time.

     6.9. Publication of Combined Results. DRHI agrees that after the end of the
first  calendar  quarter to end after the first full  calendar  month  after the
Effective Time, DRHI shall cause the prompt  publication of the combined results
of  operations of DRHI and the Company.  For purposes of this Section 6.9.,  the
term  "publication"  shall have the meaning  provided in SEC  Accounting  Series
Release No. 135.

     6.10. Indemnification and Insurance.

     (a) From and after the Effective Time, the Surviving  Corporation shall, to
the  fullest   extent   permitted   under   applicable  law  and  the  Surviving
Corporation's  Certificate of Incorporation and Bylaws (including Section 145(h)
of the  Delaware  Law),  indemnify  and hold  harmless,  each present and former
director  or  officer  of  the  Company,  determined  as of the  Effective  Time
(collectively,  the  "Indemnified  Parties"),  against  any  costs  or  expenses
(including  reasonable  attorneys'  fees),  judgments,  fines,  losses,  claims,
damages  and  liabilities  incurred in  connection  with,  and  amounts  paid in
settlement of, any claim,  action,  suit,  proceeding or investigation,  whether
civil, criminal,  administrative or investigative and wherever asserted, brought
or filed,  arising out of or pertaining to any acts or omissions or alleged acts
or omissions by them in their  capacities as such;  provided  that, as to claims
existing as of the Effective  Time, in no event shall the Surviving  Corporation
be obligated to provide indemnification under this Section 6.10.(a) in excess of
the  indemnification   that  the  Company  is  required  to  provide  under  its
Certificate of Incorporation or Bylaws as in effect as of the date hereof.

     (b) For a period of three years after the  Effective  Time,  the  Surviving
Corporation  shall  maintain  (through the  continuation  or  endorsement of the
Company's  existing  policy or the purchase of a "tail-end"  rider  permitted by
such policy) in effect,  if available,  the directors'  and officers'  liability
insurance  covering  those  persons who are  currently  covered by the Company's
directors' and officers'  liability insurance policy on the terms (including the
amounts of coverage and the amounts of  deductibles,  if any) now  applicable to
them;  provided that in no event shall the Surviving  Corporation be required to
spend in excess of 150% of the annual premium  currently paid by the Company for
such  coverage,  and provided  further  that,  if the premium for such  coverage
exceeds such  amount,  the  Surviving  Corporation  shall  maintain the greatest
coverage available for such 150% of the annual premium.

     (c) This Section 6.10.  shall survive the consummation of the Merger at the
Effective  Time, is intended to benefit the Company,  the Surviving  Corporation
and the Indemnified  Parties,  shall be binding on all successors and assigns of
the Surviving  Corporation and shall be enforceable by the Indemnified  Parties.
In the event that the Surviving  Corporation or any of its successors or assigns
(i)  consolidates or merges into any other person or entity and shall not be the
continuing or surviving corporation or entity in such consolidation or merger or
(ii) transfers all or substantially all of its
                                       41
<PAGE>
properties  and assets to any person or  entity,  then and in such case,  proper
provisions  shall be made so that the  successors  and assigns of the  Surviving
Corporation  (as the  case  may be)  assume  the  obligations  of the  Surviving
Corporation set forth in this Section 6.10.

     6.11. Notification of Certain Matters. The Company shall give prompt notice
to DRHI, and DRHI shall give prompt notice to the Company, of (i) the occurrence
or  nonoccurrence of any event the occurrence or nonoccurrence of which would be
likely to cause any representation or warranty contained in this Agreement to be
untrue or inaccurate  the result of which would be a Material  Adverse Effect to
the Company or DRHI, as applicable,  or (ii) any failure of the Company or DRHI,
as the case may be, materially to comply with or satisfy any covenant, condition
or  agreement  to be  complied  with or  satisfied  by it  hereunder;  provided,
however,  that the delivery of any notice  pursuant to this Section 6.11.  shall
not limit or  otherwise  affect the  remedies  available  hereunder to the party
receiving such notice.

     6.12. Further Action.  Upon the terms and subject to the conditions hereof,
each of the parties hereto shall use all reasonable efforts to take, or cause to
be  taken,  all  actions,  and to do,  or  cause to be done,  all  other  things
necessary,  proper or advisable to consummate  and make effective as promptly as
practicable the  transactions  contemplated  by this  Agreement,  to obtain in a
timely  manner all material  waivers,  consents and  approvals and to effect all
necessary  registrations  and filings,  and  otherwise to satisfy or cause to be
satisfied in all material  respects all conditions  precedent to its obligations
under this Agreement.

     6.13.  Public  Announcements.  DRHI and the Company shall consult with each
other  before  issuing  any press  release  with  respect  to the Merger or this
Agreement  and shall not issue any such press  release  or make any such  public
statement  without  the prior  consent of the other  party,  which  shall not be
unreasonably withheld or delayed;  provided,  however, that a party may, without
the prior  consent of the other  party,  issue  such press  release or make such
public  statement  as may upon the advice of counsel be  required  by law or the
rules  and  regulations  of the NYSE if it has used all  reasonable  efforts  to
consult with the other party.

     6.14.  Employee Benefits.  For the period of six months beginning as of the
Effective Time,  DRHI shall pay salaries and wages and (to the extent  permitted
by applicable law) provide employee benefits to persons who are employees of the
Company or any Company Subsidiary immediately before the Effective Time that are
at least substantially equivalent in the aggregate to those paid and provided by
the Company and the Company  Subsidiaries  before the Effective Time (other than
stock options or other equity-based compensation).  For the period of six months
beginning at the end of the period  described in the  preceding  sentence,  DRHI
shall provide,  to the extent permitted by applicable law,  employee benefits to
such  persons that are at least  substantially  equivalent  in the  aggregate to
those then provided by DRHI and the DRHI  Subsidiaries  generally to their other
employees.  Nothing contained herein shall be construed as requiring DRHI or any
DRHI  Subsidiary to continue the employment or position of any specific  person,
but is subject to any  employment  or severance  agreements  in effect as of the
date hereof. The
                                       42
<PAGE>
Company  and  DRHI  shall  make  such  amendments  and  modifications  to  their
respective  employee  benefit  plans as are necessary to provide that only those
employees of the Surviving  Corporation and its subsidiaries  that were eligible
to participate in the Company Employee Plans  immediately prior to the Effective
Time are eligible to participate in the Company Employee Plans immediately after
the Effective Time and only those  employees of the Surviving  Corporation  that
would have been eligible to participate  in the DRHI Employee Plans  immediately
prior to the  Effective  Time are eligible to  participate  in the DRHI Employee
Plans  immediately  after the Effective Time;  provided that the foregoing shall
not limit the Surviving Corporation's ability to amend, modify or terminate such
plans after the  Effective  Time  consistent  with the terms of such plans,  the
terms of this Agreement and applicable law.

                                   ARTICLE 7.

                        TERMINATION, AMENDMENT AND WAIVER

     7.1. Termination. This Agreement may be terminated at any time prior to the
Effective  Time,  whether  before or after  approval  of  matters  presented  in
connection  with the Merger by the  holders of the Company  Common  Stock or the
DRHI Common Stock:

     (a) by mutual written consent of DRHI and the Company;

     (b) by either DRHI or the Company:

          (i) if,  upon a vote at a duly held  meeting  of  stockholders  or any
     adjournment  thereof,  any required  approval of the holders of the Company
     Common Stock shall not have been obtained;

          (ii) if the Merger  shall not have been  consummated  on or before May
     31, 1998,  unless the failure to  consummate  the Merger is the result of a
     willful  and  material  breach of this  Agreement  by the party  seeking to
     terminate this Agreement;

          (iii) if a court of competent jurisdiction or governmental, regulatory
     or  administrative  agency or commission  shall have issued a nonappealable
     final order,  decree or ruling or taken any other action  having the effect
     of permanently  restraining,  enjoining or otherwise prohibiting the Merger
     (provided  that the right to terminate  this  Agreement  under this Section
     7.1.(b)(iii)  shall not be available to any party who has not complied with
     its  obligations  under Section  6.12.  and such  noncompliance  materially
     contributed  to the  issuance  of any such  order,  decree or ruling or the
     taking of such action);

          (iv) in the  event of a  material  breach  by the  other  party of any
     representation,  warranty,  covenant or other  agreement  contained in this
     Agreement  which would give rise to the failure of a condition set forth in
     Section 8.2.(a) or 8.3.(a) as applicable (a "Terminating Breach") (provided
     that the terminating party
                                       43
<PAGE>
     is not then in material breach of any representation, warranty, covenant or
     other  agreement  contained in this  Agreement);  provided,  that,  if such
     Terminating  Breach is curable by the Company or DRHI,  as the case may be,
     through  the  exercise  of its  reasonable  efforts  and for so long as the
     Company or DRHI, as the case may be,  continues to exercise such reasonable
     efforts,  neither DRHI nor the Company,  respectively,  may terminate  this
     Agreement under this Section 7.1.(b)(iv); or

          (v) if,  upon a vote at a duly held  meeting  of  stockholders  or any
     adjournment  thereof,  any  required  approval  of the  holders of the DRHI
     Common Stock shall not have been obtained;

     (c) by  either  DRHI  or the  Company  in the  event  that  (i)  all of the
conditions  to the  obligation  of such  party to effect the Merger set forth in
Section 8.1.  shall have been satisfied and (ii) any condition to the obligation
of such party to effect the  Merger  set forth in Section  8.2.  (in the case of
DRHI) or  Section  8.3.  (in the case of the  Company)  is not  capable of being
satisfied prior to the end of the period referred to in Section 7.1.(b)(ii);

     (d) by the Company if the Company  Board has received a Superior  Proposal,
the Company Board by requisite vote determines in its good faith judgment, after
consultation with and based upon the advice of outside legal counsel, that it is
required to do so in order to comply with its  fiduciary  duties,  withdraws its
recommendation of the transactions contemplated hereby or approves or recommends
such Superior Proposal, and the Company Board complies with all other provisions
of Section  5.2.(b) and  concurrently  complies  with the  provisions of Section
9.1.(b);

     (e) by DRHI if the Company  Board shall have  recommended  to the Company's
stockholders a Superior Proposal;  or the Company Board shall have withdrawn its
recommendation  of this  Agreement or the Merger,  provided that any  disclosure
that the Company  Board is  compelled to make of the receipt of a proposal for a
Third Party  Acquisition  in order to comply with its  fiduciary  duties or Rule
14d-9 or 14e-2  shall  not in and of itself  constitute  the  withdrawal  of the
Company Board's recommendation;  provided,  further, that such disclosure states
that no action will be taken by the Company Board with respect to the withdrawal
of its recommendation of the transactions contemplated hereby or the approval or
recommendation of any Third Party Acquisition  except in accordance with Section
5.2.(b); or

     (f) by the Company if the Stock Value is less than $12.69,  unless prior to
the Closing  Date DRHI elects,  by notice to the  Company,  to have the Exchange
Ratio equal the quotient obtained by dividing $35.00 by the Stock Value (rounded
to the nearest one thousandth).

     7.2. Effect of  Termination.  In the event of termination of this Agreement
as provided in Section 7.1., this Agreement shall forthwith become void and have
no effect,  without any liability or  obligation  on the part of any party,  its
affiliates,  directors,  officers or  stockholders  other than the provisions of
Section 9.1., unless such termination results
                                       44
<PAGE>
from the willful and material  breach by a party of any of its  representations,
warranties,  covenants or other agreements set forth in this Agreement, in which
event the  terminating  party shall retain its rights and remedies  against such
other party in respect of such other party's breach.

                                   ARTICLE 8.

                              CONDITIONS TO CLOSING

     8.1. Mutual Conditions.  The respective obligations of each party to effect
the Merger  shall be subject to the  satisfaction  at or prior to the  Effective
Time of the following conditions:

          8.1.1.  No  Injunctions  or  Restraints;   Illegality.   No  temporary
     restraining  order,  preliminary  or  permanent  injunction  or other order
     issued by any court of competent  jurisdiction  or other legal restraint or
     prohibition  preventing the  consummation of the Merger shall be in effect;
     and there shall not be any action taken, or any statute,  rule,  regulation
     or order enacted, entered, enforced or applicable to the Merger which makes
     the consummation of the Merger illegal;

          8.1.2.  Governmental Actions.  There shall not have been instituted or
     pending  any  action  or  proceeding  by  any  governmental   authority  or
     administrative  agency, before any governmental  authority,  administrative
     agency or court of competent jurisdiction, nor shall there be in effect any
     judgment,  decree or order of any  governmental  authority,  administrative
     agency or court of  competent  jurisdiction,  in either  case,  seeking  to
     prohibit or limit DRHI from  exercising all material  rights and privileges
     pertaining  to its  ownership of the assets of the Company  (including  the
     Company  Subsidiaries)  taken as a whole or the  ownership  or operation by
     DRHI or any DRHI Subsidiary of all or a material portion of the business or
     assets of the Surviving  Corporation and its subsidiaries taken as a whole,
     or  seeking  to compel  DRHI or any DRHI  Subsidiary  to dispose of or hold
     separate  all or any  material  portion  of the  business  or assets of the
     Surviving Corporation and its subsidiaries taken as a whole, as a result of
     the Merger or the transactions contemplated by this Agreement.

          8.1.3.  HSR Act. The waiting period  applicable to the consummation of
     the Merger under the HSR Act shall have expired or been terminated.

          8.1.4.  Company  Stockholder  Approval.  The  holders of shares of the
     Company Common Stock shall have approved the adoption of this Agreement and
     any other  matters  submitted  to them for the  purpose  of  approving  the
     transactions contemplated hereby.

          8.1.5.  DRHI Stockholder  Approval.  The holders of shares of the DRHI
     Common Stock shall have  approved the  adoption of this  Agreement  and any
     other  
                                       45
<PAGE>
     matters  submitted  to them for the purpose of approving  the  transactions
     contemplated hereby.

          8.1.6.  Listing.  The shares of the DRHI Common  Stock to be issued in
     connection  with the  Merger  shall  have been  listed  on the  NYSE,  upon
     official notice of issuance.

          8.1.7.  Registration Statement.  The Registration Statement shall have
     been declared effective in accordance with the provisions of the Securities
     Act and Blue Sky Laws, if applicable, and no stop order with respect to the
     Registration  Statement  shall  be in  effect  and no  proceeding  for that
     purpose  shall  have been  instituted  by the SEC or any  state  regulatory
     authorities.

          8.1.8. Consents. All consents, authorizations, orders and approvals of
     (or filings or registrations  with) any governmental  commission,  board or
     other  regulatory  body, the absence of which would have a Material Adverse
     Effect on the  Surviving  Corporation,  DRHI,  any DRHI  Subsidiary  or any
     Company Subsidiary, shall have been obtained or made, except for filings in
     connection  with the Merger and any other  documents  required  to be filed
     after the Effective Time.

     8.2.  Conditions  to  Obligations  of  DRHI.  The  obligations  of  DRHI to
consummate the Merger and the other  transactions  contemplated  hereby shall be
subject to the  satisfaction,  at or prior to the Closing Date, of the following
additional conditions:

     (a) The  representations  and  warranties of the Company  contained  herein
(without regard to any materiality  exceptions  contained therein) shall be true
at and as of the  Closing  Date with the same effect as if made at and as of the
Closing Date (except to the extent such representation or warranty  specifically
related to an earlier date, in which case such  representation or warranty shall
be true as of such earlier date),  except for such untruths or inaccuracies that
would not,  individually,  or in the aggregate,  have a Company Material Adverse
Effect,  and the Company  shall have  performed  and  complied  in all  material
respects with all  agreements  and  covenants set forth in this  Agreement to be
performed or complied with by it on or prior to the Closing Date.

     (b) DRHI shall have been furnished  with a certificate,  executed by a duly
authorized officer of the Company,  dated the Closing Date, certifying as to the
fulfillment of the conditions in paragraph (a).

     (c)  The  Merger  shall  qualify  for  "pooling  of  interests"  accounting
treatment,  and DRHI shall have  received  an update  letter,  dated the Closing
Date,  from Ernst & Young LLP to such effect with  respect to DRHI if the Merger
is consummated in accordance with the terms and provisions of this Agreement.

     (d) DRHI shall have  received an opinion from Gibson,  Dunn & Crutcher LLP,
tax counsel to DRHI,  to the effect that the Merger will  constitute  a tax-free
reorganization  (except  with  respect to cash  received  in lieu of  fractional
shares) within the meaning of
                                       46
<PAGE>
Section  354(a)(1)  and Section  368(a) of the Code,  which opinion may be based
upon  reasonable  representations  of fact  provided by officers of DRHI and the
Company.

     8.3.  Conditions to  Obligations  of the Company.  The  obligations  of the
Company to consummate the Merger and the other transactions  contemplated hereby
shall be subject to the  satisfaction,  at or prior to the Closing  Date, of the
following conditions:

          (a)  The  representations  and  warranties  of DRHI  contained  herein
     (without regard to any materiality  exceptions  contained therein) shall be
     true at and as of the  Closing  Date with the same effect as if made at and
     as of the  Closing  Date  (except  to the  extent  such  representation  or
     warranty  specifically  relates  to an  earlier  date,  in which  case such
     representation  or warranty shall be true as of such earlier date),  except
     for such untruths or  inaccuracies  that would not,  individually or in the
     aggregate,  have a DRHI  Material  Adverse  Effect,  and  DRHI  shall  have
     performed  and complied in all material  respects with all  agreements  and
     covenants  set forth in this  Agreement to be performed or complied with by
     it on or prior to the Closing Date.

          (b) The Company shall have been furnished with a certificate, executed
     by duly authorized  officer of DRHI, dated the Closing Date,  certifying as
     to the fulfillment of the conditions in paragraph (a).

          (c) The Merger  shall  quality for "pooling of  interests"  accounting
     treatment,  and the Company shall have received an update letter, dated the
     Closing Date,  from Arthur  Andersen LLP to such effect with respect to the
     Company  if the  Merger is  consummated  in  accordance  with the terms and
     provisions of this Agreement.

          (d) The Company  shall have  received an opinion from Cahill  Gordon &
     Reindel,  tax  counsel to the  Company,  to the effect that the Merger will
     constitute a tax-free  reorganization (except with respect to cash received
     in lieu of fractional  shares) within the meaning of Section  354(a)(1) and
     Section  368(a) of the Code,  which  opinion  may be based upon  reasonable
     representations of fact provided by officers of DRHI and the Company.

                                   ARTICLE 9.

                               GENERAL PROVISIONS

     9.1. Expenses.

     (a)  Except as  otherwise  provided  in this  Section  9.1.,  all costs and
expenses  incurred  in  connection  with  this  Agreement  and the  transactions
contemplated  hereby shall be paid by the party incurring such expense,  whether
or not the Merger is consummated.

     (b) In the event that this Agreement shall be terminated:
                                       47
<PAGE>
          (i) pursuant to Section 7.1.(d) or Section 7.1.(e);

          (ii) by DRHI pursuant to Section  7.1.(b)(iv) and within twelve months
     thereafter  the Company  enters into an  agreement  with respect to a Third
     Party Acquisition or a Third Party  Acquisition  occurs involving any party
     (or any  affiliate  thereof)  (x) with whom the Company (or its agents) had
     negotiations  with a view to a Third  Party  Acquisition,  (y) to whom  the
     Company (or its agents) furnished  information with a view to a Third Party
     Acquisition or (z) who had submitted a proposal or expressed an interest in
     a Third Party Acquisition, in the case of each of clauses (x), (y) and (z),
     prior to such termination; or

          (iii)  pursuant to Section  7.1.(b)(i)  and at the time of the Company
     stockholders'  meeting at which the Company  failed to obtain the requisite
     vote there shall be  outstanding  an offer by a Third Party to consummate a
     Third  Party   Acquisition   involving  the  payment  of  consideration  to
     stockholders  of  the  Company  with  a  value  in  excess  of  the  Merger
     Consideration  and within twelve months  thereafter the Company enters into
     an  agreement  with respect to such Third Party  Acquisition  or such Third
     Party Acquisition occurs);

the Company  shall pay to DRHI the amount of  $12,000,000  immediately  upon the
occurrence of the event described in this Section 9.1.(b),  less (in the case of
clause (iii) above) any amount theretofore paid pursuant to Section 9.1.(c).

     (c) In the event  this  Agreement  shall be  terminated  by DRHI or (when a
proposal  for a Third  Party  Acquisition  is pending)  the Company  pursuant to
Section 7.1.(b)(i),  and at the time of termination DRHI is not in breach of its
material  obligations   hereunder,   the  Company  shall,   promptly  after  the
termination of this Agreement,  reimburse DRHI for all documented  out-of-pocket
expenses and fees  (including,  without  limitation,  fees payable to all banks,
investment banking firms and other financial institutions,  and their respective
agents and counsel,  and all fees of counsel,  accountants,  financial printers,
experts and  consultants  to DRHI),  whether  incurred prior to, on or after the
date  hereof,  in  connection  with  the  Merger  and  the  consummation  of all
transactions contemplated by this Agreement; provided that in no event shall the
Company be required to pay in excess of an aggregate of  $1,500,000  pursuant to
this Section 9.1.(c).

     (d) In the event this Agreement shall be terminated by the Company pursuant
to Section 7.1.  (b)(v),  and at the time of  termination  the Company is not in
breach of its material  obligations  hereunder,  DRHI shall,  promptly after the
termination  of  this  Agreement,  reimburse  the  Company  for  all  documented
out-of-pocket expenses and fees (including,  without limitation, fees payable to
all banks, investment banking firms and other financial institutions,  and their
respective agents and counsel, and all fees of counsel,  accountants,  financial
printers, experts and consultants to the Company), whether incurred prior to, on
or after the date hereof,  in connection with the Merger and the consummation of
all transactions contemplated by this Agreement; provided that in no event shall
DRHI 
                                       48
<PAGE>
be  required to pay in excess of an  aggregate  of  $1,500,000  pursuant to this
Section 9.1.(d).

     9.2.   Effectiveness   of   Representations,   Warranties,   Covenants  and
Agreements.   Except  as   otherwise   provided  in  this  Section   9.2.,   the
representations, warranties, covenants and agreements of each party hereto shall
remain  operative and in full force and effect  regardless of any  investigation
made by or on behalf of any other party hereto,  any person controlling any such
party or any of their  officers  or  directors,  whether  prior to or after  the
execution of this  Agreement.  The  representations,  warranties,  covenants and
agreements in this Agreement shall terminate at the Effective Time,  except that
(i) the  agreements set forth in Article 2., Section 6.3. and Section 6.7. shall
survive the  Effective  Time  indefinitely,  and (ii) the  agreements in Section
6.9.,  Section 6.10.  and Section 6.14.  shall survive in accordance  with their
respective terms. The Confidentiality  Letters shall survive termination of this
Agreement as provided therein.

     9.3. Notices.  All notices and other  communications given or made pursuant
hereto  shall be in writing  and shall be deemed to have been duly given or made
if and when delivered  personally or by overnight  courier to the parties at the
following  addresses  or  sent by  electronic  transmission,  with  confirmation
received,  to the telecopy numbers  specified below (or at such other address or
telecopy number for a party as shall be specified by like notice):

         (a)      If to DRHI:

                  D. R. Horton, Inc.
                  1901 Ascension Boulevard
                  Suite 100
                  Arlington, TX  76006
                  Telecopier No.:  (817) 856-8249
                  Telephone No.:  (817) 856-8200
                  Attention:  Chairman and Chief Executive Officer

         (b)      If to the Company:

                  Continental Homes Holdings Corp.
                  7001 N. Scottsdale Road
                  Suite 2050
                  Scottsdale, AZ  85253
                  Telecopier No.:  (602) 483-8237
                  Telephone No.:  (602) 483-0006
                  Attention:  President and Chief Executive Officer

     9.4. Certain Definitions. For purposes of this Agreement, the term:

     (a) "affiliate" means a person that directly or indirectly,  through one or
more  intermediaries,  controls,  is controlled  by, or is under common  control
with, the first
                                       49
<PAGE>
mentioned  person;  including,  without  limitation,  any  partnership,  limited
liability  company or joint venture in which the first mentioned  person (either
alone,  or through or  together  with any other  subsidiary)  has,  directly  or
indirectly, an interest of 10% or more;

     (b) "beneficial  owner" with respect to any shares means a person who shall
be deemed to be the beneficial owner of such shares (i) which such person or any
of its  affiliates or  associates  (as such term is defined in Rule 12b-2 of the
Exchange Act) beneficially owns, directly or indirectly,  (ii) which such person
or any of its  affiliates or associates  has,  directly or  indirectly,  (A) the
right to acquire (whether such right is exercisable  immediately or subject only
to the passage of time), pursuant to any agreement, arrangement or understanding
or upon the  exercise of  consideration  rights,  exchange  rights,  warrants or
options,  or  otherwise,  or (B) the right to vote  pursuant  to any  agreement,
arrangement or understanding, or (iii) which are beneficially owned, directly or
indirectly,  by any other persons with whom such person or any of its affiliates
or associates has any agreement, arrangement or understanding for the purpose of
acquiring, holding, voting or disposing of any shares;

     (c)  "business  day" means any day other  than a day on which  banks in New
York are required or authorized to be closed;

     (d)  "control"  (including  the terms  "controlled  by" and  "under  common
control  with") means the  possession,  directly or  indirectly or as trustee or
executor,  of the power to direct or cause the  direction of the  management  or
policies of a person,  whether  through the  ownership  of stock,  as trustee or
executor, by contract or credit arrangement or otherwise;

     (e)  "material  adverse  effect"  means  when used in  connection  with the
Company or any Company Subsidiary,  or DRHI or any DRHI Subsidiary,  as the case
may be, any change,  effect or  circumstance  that is materially  adverse to the
business,  assets, financial condition,  results of operations of the Company or
any  Company  Subsidiary,  or DRHI or any DRHI  Subsidiary,  as the case may be.
"Material  Adverse  Effect"  means any change,  effect or  circumstance  that is
materially adverse to the business,  assets,  financial  condition or results of
operations  of the Company and the  Company  Subsidiaries,  or DRHI and the DRHI
Subsidiaries,  as the case may be, in each case taken as a whole, other than any
such changes,  effects or  circumstances:  (i) set forth or  contemplated by the
Company Disclosure Schedule or the DRHI Disclosure Schedule, as the case may be;
(ii) set forth or described  in the Company SEC Reports or DRHI SEC Reports,  as
the case may be; or (iii) affecting the home construction industry generally;

     (f)  "person"  means  an  individual,  corporation,   partnership,  limited
liability company, association, trust, unincorporated organization, other entity
or group (as defined in Section 13(d)(3) of the Exchange Act);

     (g)  "subsidiary"  or   "subsidiaries"   of  the  Company,   the  Surviving
Corporation, DRHI or any other person means any corporation,  partnership, joint
venture,  limited  liability  company,  business  trust or other legal entity of
which the Company, the Surviving
                                       50
<PAGE>
Corporation,  DRHI or such other  person,  as the case may be  (either  alone or
through or together with any other  subsidiary),  owns,  directly or indirectly,
more than 50% of the stock or other  equity  interests  the holders of which are
generally  entitled to vote for the  election of the board of directors or other
governing body of such corporation or other legal entity.

     (h)  "trading  day" means any day on which the NYSE is open for the trading
of securities.

     9.5.  Amendment.  This  Agreement  may be amended by the parties  hereto by
action taken by or on behalf of their respective Boards of Directors at any time
prior to the Effective  Time;  provided,  however,  that,  after approval of the
Merger by the  stockholders  of the Company and DRHI,  no amendment  may be made
which by law requires further approval by such stockholders without such further
approval.  This  Agreement may not be amended except by an instrument in writing
signed by the parties hereto.

     9.6. Waiver.  At any time prior to the Effective Time, any party hereto may
with respect to any other party  hereto (a) extend the time for the  performance
of any of the  obligations  or other  acts,  (b) waive any  inaccuracies  in the
representations  and warranties  contained  herein or in any document  delivered
pursuant  hereto,  or waive  compliance with any of the agreements or conditions
contained herein. Any such extension or waiver shall be valid if set forth in an
instrument in writing signed by the party or parties to be bound thereby.

     9.7.  Headings.  The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or  interpretation  of
this Agreement.

     9.8.  Severability.  If any term or other  provision  of this  Agreement is
invalid,  illegal or incapable  of being  enforced by any rule of law, or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the  economic or legal  substance  of
the  transactions  contemplated  hereby is not affected in any manner adverse to
any party. Upon such  determination that any term or other provision is invalid,
illegal or incapable of being  enforced,  the parties hereto shall  negotiate in
good faith to modify this  Agreement so as to effect the original  intent of the
parties  as  closely  as  possible  in an  acceptable  manner  to the  end  that
transactions contemplated hereby are fulfilled to the extent possible.

     9.9. Entire Agreement.  This Agreement constitutes the entire agreement and
supersedes all prior agreements and undertakings (other than the Confidentiality
Letters), both written and oral, among the parties, or any of them, with respect
to the subject matter hereof.

     9.10. Assignment.  This Agreement shall not be assigned by operation of law
or otherwise,  except that DRHI may assign all or any of its rights hereunder to
any affiliate
                                       51
<PAGE>
provided  that no such  assignment  shall  relieve  the  assigning  party of its
obligations hereunder.

     9.11.  Parties in Interest.  This Agreement shall be binding upon and inure
solely to the  benefit  of each party  hereto,  and  nothing in this  Agreement,
express or implied,  is intended  to or shall  confer upon any other  person any
right,  benefit  or remedy of any nature  whatsoever  under or by reason of this
Agreement,  including,  without  limitation,  by way of subrogation,  other than
Section  6.10.  (which is  intended  to be for the  benefit  of the  Indemnified
Parties and may be enforced by such Indemnified Parties).

     9.12. Failure or Indulgence Not Waiver; Remedies Cumulative.  No failure or
delay on the part of any party  hereto in the  exercise  of any right  hereunder
shall impair such right or be construed to be a waiver of, or  acquiescence  in,
any breach of any  representation,  warranty or agreement herein,  nor shall any
single or partial  exercise of any such right preclude other or further exercise
thereof  or of any other  right.  All rights and  remedies  existing  under this
Agreement  are  cumulative  to, and not  exclusive  of,  any rights or  remedies
otherwise available, except as otherwise provided herein.

     9.13.  Governing Law. This Agreement shall be governed by, and construed in
accordance  with,  the  internal  laws of the State of  Delaware  applicable  to
contracts executed and fully performed within the State of Delaware.

     9.14.  Counterparts.  This  Agreement  may  be  executed  in  one  or  more
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed  shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.

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     IN WITNESS  WHEREOF,  DRHI and the Company have caused this Agreement to be
executed  as of the  date  first  written  above by  their  respective  officers
thereunto duly authorized.

                                    D. R. HORTON, INC.


                                    By: /s/ D.R. HORTON
                                       ------------------------------
                                    Name:   D.R. HORTON
                                    Title:  PRESIDENT


                                    CONTINENTAL HOMES HOLDING CORP.


                                    By: /s/ W. THOMAS HICKCOX
                                       ------------------------------
                                    Name:  W. THOMAS HICKCOX
                                    Title: PRESIDENT AND CHIEF EXECUTIVE OFFICER
                                       53