EX-4.1






Exhibit 4.1




SECTION 382 RIGHTS AGREEMENT




between




D.R. HORTON, INC.




and




AMERICAN STOCK TRANSFER & TRUST COMPANY, LLC,

as Rights Agent




Dated as of August 19, 2009




 









 





TABLE OF CONTENTS




	 	 	 	 	 
	 	 	Page	 
	Section 1 Certain Definitions
	 	 	1	 
	Section 2 Appointment of the Rights Agent
	 	 	5	 
	Section 3 Issuance of Rights Certificates
	 	 	6	 
	Section 4 Form of Rights Certificates
	 	 	8	 
	Section 5 Countersignature and Registration
	 	 	8	 
	Section 6 Transfer, Split-Up, Combination and Exchange of Rights Certificates; Mutilated, Destroyed, Lost

or Stolen Rights Certificates
	9	 
	Section 7 Exercise of Rights; Purchase Price; Expiration Date of Rights
	 	 	9	 
	Section 8 Cancellation and Destruction of Rights Certificates
	 	 	11	 
	Section 9 Company Covenants Concerning Securities and Rights
	 	 	11	 
	Section 10 Record Date
	 	 	13	 
	Section 11 Adjustment of Purchase Price, Number and Kind of Securities or Number
of Rights
	 	 	13	 
	Section 12 Certificate of Adjusted Purchase Price or Number of Shares
	 	 	20	 
	Section 13 Fractional Rights and Fractional Shares
	 	 	21	 
	Section 14 Rights of Action
	 	 	22	 
	Section 15 Agreement of Rights Holders
	 	 	23	 
	Section 16 Rights Certificate Holder Not Deemed a Stockholder
	 	 	23	 
	Section 17 Concerning the Rights Agent
	 	 	23	 
	Section 18 Merger, Consolidation or Change of Name of the Rights Agent
	 	 	24	 
	Section 19 Duties of the Rights Agent
	 	 	25	 
	Section 20 Change of the Rights Agent
	 	 	27	 
	Section 21 Issuance of New Rights Certificates
	 	 	28	 
	Section 22 Redemption
	 	 	28	 
	Section 23 Exchange
	 	 	29	 
	Section 24 Notice of Certain Events
	 	 	30	 
	Section 25 Notices
	 	 	30	 
	Section 26 Supplements and Amendments
	 	 	31	 
	Section 27 Successors
	 	 	32	 
	Section 28 Determinations and Actions by the Board
	 	 	32	 
	Section 29 Benefits of this Agreement
	 	 	32	 
	Section 30 Severability
	 	 	32	 
	Section 31 Governing Law
	 	 	33	 
	Section 32 Counterparts; Facsimiles and PDFs
	 	 	33	 
	Section 33 Descriptive Headings
	 	 	33	 






EXHIBITS




	 	 	 
	Exhibit A:

	 	Form of Certificate of Designation, Preferences and Rights of
Series A Junior Participating Preferred Stock
	Exhibit B:

	 	Form of Rights Certificate
	Exhibit C:

	 	Summary of Rights






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SECTION 382 RIGHTS AGREEMENT




     SECTION 382 RIGHTS AGREEMENT, dated as of August 19, 2009 (the “Agreement”), between
D.R. Horton, Inc., a Delaware corporation (the “Company”), and American Stock Transfer &
Trust Company, LLC (the “Rights Agent”).



W I
T N E S S E T H




     WHEREAS, on August 19, 2009 (the “Rights Dividend Declaration Date”), the Board (as
hereinafter defined) authorized and declared a dividend distribution of one right (a
“Right”) for each share of common stock, par value $0.01 per share, of the Company (the
“Common Stock”) outstanding at the Close of Business (as hereinafter defined) on August 31,
2009 (the “Record Date”), each Right initially representing the right to purchase one
ten-thousandth of a share of Preferred Stock (as hereinafter defined) of the Company, upon the
terms and subject to the conditions hereinafter set forth, and further authorized and directed the
issuance of one Right (subject to adjustment as provided herein) with respect to each share of
Common Stock issued or delivered by the Company after the Record Date but prior to the earlier of
the Distribution Date (as hereinafter defined) and the Expiration Date (as hereinafter defined) or
as provided in Section 21 hereof.



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



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



          (a) “4.9% Stockholder” shall mean a Person (other than the Company, any Related Person
or any Exempt Person) who beneficially owns 4.9% or more of the Company’s then-outstanding Common
Stock.




          (b) “Acquiring Person” shall mean any Person (other than the Company, any Related
Person or any Exempt Person) that is or has become a 4.9% Stockholder, provided,
however, that any Person who would otherwise qualify as an Acquiring Person upon the
execution of this Agreement or any Person who has ceased to be an Exempt Person as of a particular
date by determination of the Board will not be deemed to be an “Acquiring Person” for any purpose
of this Agreement on and after such date unless and until such Person acquires Beneficial Ownership
of one additional share of Common Stock while the Beneficial Owner of 4.9% of more of the Company’s
then-outstanding Common Stock, and provided, also, that a Person will not be deemed
to have become an Acquiring Person solely as a result of (i) a reduction in the number of shares of
Common Stock outstanding, (ii) the exercise of any options, warrants, rights or similar interests
(including restricted stock) granted by the Company to its directors, officers and employees,
(iii) any unilateral grant of any security by the Company, or (iv) an Exempt Transaction, unless
and until such Person acquires Beneficial Ownership of one additional share of Common Stock while
the Beneficial Owner of 4.9% of more of the Company’s then-outstanding Common Stock. The Board
shall not be required to make any determination with respect to a potential Acquiring Person,
including whether the potential Acquiring Person is an Exempt Person or whether the change of
Beneficial Ownership of the




1









 







potential Acquiring Person has resulted from an Exempt Transaction, until five Business Days
after the date on which all Board members first received actual notice of the change of Beneficial
Ownership at issue. Notwithstanding the foregoing, the Board may, in its sole discretion,
determine that any Person shall not be deemed to be an “Acquiring Person” for any purposes of this
Agreement.




          (c) “Affiliate” and “Associate” shall have the respective meanings ascribed to
such terms in Rule 12b-2 of the General Rules and Regulations under the Exchange Act as in effect
on the date of this Agreement, and to the extent not included within the foregoing clause of this
Section 1(c), shall also include, with respect to any Person, any other Person (other than a
Related Person or an Exempt Person) whose shares of Common Stock would be deemed constructively
owned by such first Person, owned by a single “entity” (as defined in Section 1.382-3(a)(1) of the
Treasury Regulations) or otherwise aggregated with shares owned by such first Person pursuant to
the provisions of Section 382 of the Code, or any successor provision or replacement provision, and
the Treasury Regulations thereunder, provided, however, that a Person shall not be
deemed to be the Affiliate or Associate of another Person solely because either or both Persons are
or were directors of the Company.




          (d) “Agreement” shall have the meaning set forth in the preamble of this Agreement.




          (e) “Authorized Officer” shall mean the Chairman of the Board, Vice Chairman of the
Board, Chief Executive Officer, President, any Executive Vice President or the Treasurer of the
Company.




          (f) A Person shall be deemed the “Beneficial Owner” of, shall be deemed to have
“Beneficial Ownership” of and shall be deemed to “beneficially own” any securities
which such Person directly owns, or would be deemed to constructively own, pursuant to Section 382
of the Code, or any successor provision or replacement provision, and the Treasury Regulations
promulgated thereunder.




          (g) “Board” shall mean the Board of Directors of the Company.




          (h) “Business Day” shall mean any day other than a Saturday, Sunday or a day on which
banking institutions in the State of New York are authorized or obligated by law or executive order
to close.




          (i) “Common Stock” shall have the meaning set forth in the preamble of this Agreement.




          (j) “Close of Business” on any given date shall mean 5:00 P.M., New York City time, on
such date; provided, however, that if such date is not a Business Day, it shall
mean 5:00 P.M., New York City time, on the next succeeding Business Day.




          (k) “Code” shall mean the Internal Revenue Code of 1986, as amended.




          (l) “Company” shall have the meaning set forth in the preamble of this Agreement.




2









 








          (m) “Current Per Share Market Price” shall have the meaning set forth in
Section 11(d)(i) or Section 11(d)(ii) hereof, as applicable.




          (n) “Current Value” shall have the meaning set forth in Section 11(a)(iii) hereof.




          (o) “Distribution Date” shall mean the earliest of (i) the Close of Business on the
tenth Business Day after the Stock Acquisition Date and (ii) the Close of Business on the tenth
Business Day (or, such later date as may be specified by the Board prior to such time as any Person
becomes an Acquiring Person) after the commencement of a tender or exchange offer by or on behalf
of any Person (other than the Company, any Related Person or any Exempt Person), if upon the
consummation thereof such Person would become an Acquiring Person; provided,
however, that if a tender or exchange offer is terminated prior to the occurrence of a
Distribution Date, then no Distribution Date shall occur as a result of such tender or exchange
offer.




          (p) “Equivalent Preferred Stock” shall have the meaning set forth in Section 11(b)
hereof.




          (q) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.




          (r) “Exchange Ratio” shall have the meaning set forth in Section 23(a) hereof.




          (s) “Exempt Person” shall mean any Person (together with its Affiliates and
Associates) whose status as a 4.9% Stockholder would not, as determined by the Board in its sole
discretion, jeopardize or endanger in any material respect the availability to the Company of its
Tax Benefits, provided, however, that, such a Person shall cease to be an Exempt
Person if the Board, in its sole discretion, makes a contrary determination based on the potential
effect of such Person’s status as a 4.9% Stockholder (together with all Affiliates and Associates
of such Person) with respect to the availability to the Company of its Tax Benefits.




          (t) “Exempt Transaction” shall mean any transaction that the Board determines, in its
sole discretion, is exempt, which determination shall be irrevocable.




          (u) “Expiration Date” shall mean the earliest of (i) the Final Expiration Date,
(ii) the time at which the Rights are redeemed as provided in Section 22 hereof, (iii) the time at
which the Rights are exchanged in full as provided in Section 23 hereof, (iv) the effective date of
the repeal of Section 382 of the Code, or any successor provision or replacement provision, if the
Board determines that this Agreement is no longer necessary for the preservation of Tax Benefits,
(v) the beginning of a taxable year of the Company for which the Board determines that the Company
has or will have no Tax Benefits and (vi) August 19, 2010 if Stockholder Approval has not been
obtained.




          (v) “Final Expiration Date” shall be August 19, 2019.




          (w) “Ownership Statement” shall have the meaning set forth in Section 3(a) hereof.




3









 








          (x) “Person” shall mean any individual, firm, corporation, partnership, limited
liability company, limited liability partnership, trust or other legal entity, or any group of
persons making a “coordinated acquisition” of shares or otherwise treated as an entity within the
meaning of Section 1.382-3(a)(1) of the Treasury Regulations or otherwise for purposes of
Section 382 of the Code, or any successor provision or replacement provision, and includes any
successor (by merger or otherwise) of such individual or entity.




          (y) “Preferred Stock” shall mean shares of Series A Junior Participating Preferred
Stock, par value $0.10 per share, of the Company having the rights and preferences set forth in the
form of Certificate of Designation, Preferences and Rights of Series A Junior Participating
Preferred Stock attached hereto as Exhibit A.




          (z) “Purchase Price” shall mean initially $80.00 per one ten-thousandth of a share of
Preferred Stock, subject to adjustment from time to time as provided in this Agreement.




          (aa) “Record Date” shall have the meaning set forth in the recitals to this Agreement.




          (bb) “Redemption Price” shall mean $0.00001 per Right, subject to adjustment of the
Company to reflect any stock split, stock dividend or similar transaction occurring after the date
hereof.




          (cc) “Related Person” shall mean (i) any Subsidiary of the Company or (ii) any
employee benefit or stock ownership plan of the Company or of any Subsidiary of the Company or any
entity holding shares of Common Stock for or pursuant to the terms of any such plan.




          (dd) “Rights” shall have the meaning set forth in the recitals to this Agreement.




          (ee) “Rights Agent” shall have the meaning set forth in the preamble of this Agreement
except as otherwise provided in Section 18 and Section 20 hereof.




          (ff) “Rights Certificates” shall mean certificates evidencing the Rights, in
substantially the form attached hereto as Exhibit B.




          (gg) “Rights Dividend Declaration Date” shall have the meaning set forth in the
recitals to this Agreement.




          (hh) “Section 11(a)(ii) Event” shall have the meaning set forth in Section 11(a)(ii)
hereof.




          (ii) “Section 11(a)(ii) Trigger Date” shall have the meaning set forth in
Section 11(a)(iii) hereof.




          (jj) “Securities Act” shall mean Securities Act of 1933, as amended.








          (kk) “Spread” shall have the meaning set forth in Section 11(a)(iii) hereof.




4









 








          (ll) “Stock Acquisition Date” shall mean the first date of public announcement (which,
for purposes of this definition, shall include, without limitation, a report filed or amended
pursuant to Section 13(d) or Section 13(g) under the Exchange Act) by the Company or an Acquiring
Person that an Acquiring Person has become such.




          (mm) “Stockholder Approval” shall mean the approval of this Agreement by the
affirmative vote of a majority of all the votes cast at a duly called meeting of stockholders of
the Company (or any adjournment or postponement thereof) at which a quorum is present.




          (nn) “Subsidiary” shall mean, with reference to any Person, any corporation or other
legal entity of which a majority of the voting power of the voting equity securities or equity
interests is owned, directly or indirectly, by such Person, or otherwise controlled by such Person.




          (oo) “Substitution Period” shall have the meaning set forth in Section 11(a)(iii)
hereof.




          (pp) “Summary of Rights” shall mean a copy of a summary of the terms of the Rights, in
substantially the form attached hereto as Exhibit C.




          (qq) “Tax Benefits” shall mean the net operating loss carry-overs, capital loss
carry-overs, general business credit carry-overs, alternative minimum tax credit carry-overs and
foreign tax credit carry-overs, as well as any “net unrealized built-in loss” within the meaning of
Section 382 of the Code, or any successor provision or replacement provision, of the Company or any
direct or indirect subsidiary thereof.




          (rr) “Trading Day” shall mean a day on which the principal national securities
exchange on which the shares of Common Stock are listed or admitted to trading is open for the
transaction of business or if the shares of Common Stock are not listed or admitted to trading on
any national securities exchange, a Business Day.




          (ss) “Treasury Regulations” shall mean final, temporary and proposed income tax
regulations promulgated under the Code, including any amendments thereto.




          (tt) “Trust” shall have the meaning set forth in Section 23(a) hereof.




          (uu) “Trust Agreement” shall have the meaning set forth in Section 23(a) hereof.




     Section 2 Appointment of the Rights Agent. The Company hereby appoints the Rights Agent to
act as agent for the Company and the registered holders of the Rights in accordance with the terms
and conditions hereof, and the Rights Agent hereby accepts such appointment and hereby certifies
that it complies with the requirements of the New York Stock Exchange governing transfer agents and
registrars. The Company may from time to time appoint such co-rights agents as it may deem
necessary or desirable. The Rights Agent shall have no duty to supervise, and shall in no event be
liable for, the acts or omission of any such co-rights agent. Prior to the appointment of a
co-rights agent, the specific duties and obligations of each such co-rights agents shall be set
forth in writing and delivered to the Rights Agent and the proposed co-rights agent. Any actions
which may be taken by the Rights Agent pursuant to the



5









 







terms of this Agreement may be taken by any such co-rights agent. To the extent that any
co-rights agent takes any action pursuant to this Agreement, such co-rights agent shall be entitled
to all of the rights and protections of, and subject to all of the applicable duties and
obligations imposed upon, the Rights Agent pursuant to the terms of this Agreement. The Rights
Agent will have no duty to supervise, and in no event will be liable for, the acts or omissions of
any co-rights agent.



     Section 3 Issuance of Rights Certificates.



          (a) Until the Distribution Date, (i) the Rights shall be evidenced (subject to Section 3(b)
and Section 3(c) hereof) by the certificates representing the shares of Common Stock in the names
of the record holders thereof (which certificates representing such shares of Common Stock shall
also be deemed to be certificates for Rights) or by the current ownership statements issued with
respect to uncertificated shares of Common Stock in lieu of such certificates (“Ownership
Statements”) (which Ownership Statements shall be deemed also to be certificates for Rights)
and (ii) the Rights shall be transferable only in connection with the transfer of the underlying
shares of Common Stock.




          (b) On or as promptly as practicable after the Record Date, the Company shall send, in
accordance with Section 25 hereof, to each record holder of shares of Common Stock as of the Close
of Business on the Record Date, a copy of a Summary of Rights. With respect to shares of Common
Stock outstanding as of the Record Date, until the Distribution Date, the Rights associated with
such shares of Common Stock will be evidenced by the certificate or Ownership Statement for such
shares of Common Stock registered in the names of the holders thereof, in each case together with
the Summary of Rights. Until the Distribution Date, the surrender for transfer of any certificate
or Ownership Statement for shares of Common Stock outstanding on the Record Date, with or without a
copy of the Summary of Rights, shall also constitute the transfer of the Rights associated with the
shares of Common Stock represented by such certificate or Ownership Statement.




          (c) Rights shall be issued by the Company in respect of all shares of Common Stock (other than
any shares of Common Stock that may be issued upon the exercise or exchange of any Right) issued or
delivered by the Company after the Record Date but prior to the earlier of the Distribution Date
and the Expiration Date, and, to the extent provided in Section 21 hereof, after the Distribution
Date. Certificates and Ownership Statements representing such shares of Common Stock shall have
stamped on, impressed on, printed on, written on, or otherwise affixed to them a legend in
substantially the following form or such similar legend as the Company may deem appropriate and is
not inconsistent with the provisions of this Agreement and as do not affect the rights, duties or
responsibilities of the Rights Agent, or as may be required to comply with any applicable law or
with any rule or regulation made pursuant thereto or with any rule or regulation of any stock
exchange or transaction reporting system on which the shares of Common Stock may from time to time
be listed or quoted:





This [certificate/statement] also evidences and entitles the holder
hereof to certain Rights as set forth in the Section 382 Rights
Agreement between D.R. Horton, Inc. and American Stock Transfer &
Trust Company, LLC, dated as of August 19, 2009 and



6









 







as amended from time to time (the “Rights Agreement”), the
terms of which are hereby incorporated herein by reference and a
copy of which is on file at the principal executive offices of D.R.
Horton, Inc. The Rights are not exercisable prior to the occurrence
of certain events specified in the Rights Agreement. Under certain
circumstances, as set forth in the Rights Agreement, such Rights may
be redeemed, may be exchanged, may expire, may be amended, or may be
evidenced by separate certificates and no longer be evidenced by
this [certificate/statement]. D.R. Horton, Inc. shall mail to the
holder of this [certificate/statement] a copy of the Rights
Agreement, as in effect on the date of mailing, without charge
promptly after receipt of a written request therefor. Under
certain circumstances as set forth in the Rights Agreement, Rights
that are or were beneficially owned by an Acquiring Person or any
Affiliate or Associate of an Acquiring Person (as such terms are
defined in the Rights Agreement) may become null and void.


With respect to such certificates or Ownership Statements containing the foregoing legend, until
the Distribution Date, the Rights associated with the shares of Common Stock represented by such
certificates or Ownership Statements shall be represented by such certificates or Ownership
Statements alone and the surrender for transfer of any certificate or Ownership Statement for
shares of Common Stock shall also constitute the transfer of the Rights associated with the shares
of Common Stock represented by such certificate or Ownership Statement.




          (d) As promptly as practicable after the Distribution Date, the Company shall prepare and
execute, the Rights Agent shall countersign and the Company shall send or cause to be sent (and the
Rights Agent will, if requested, and if provided with all necessary information, send), in
accordance with Section 25 hereof, to each record holder of shares of Common Stock, as of the Close
of Business on the Distribution Date (other than an Acquiring Person or any Associate or Affiliate
of an Acquiring Person), a Rights Certificate representing one Right for each share of Common Stock
so held, subject to adjustment as provided herein. In the event that an adjustment in the number
of Rights per share of Common Stock has been made pursuant to Section 11(i) or Section 11(p)
hereof, at the time of distribution of the Rights Certificates, the Company shall not be required
to issue Rights Certificates evidencing fractional Rights but may, in lieu thereof, make the
necessary and appropriate rounding adjustments (in accordance with Section 13(a) hereof) so that
Rights Certificates evidencing only whole numbers of Rights are distributed and cash is paid in
lieu of any fractional Rights. As of and after the Distribution Date, the Rights shall be
represented solely by such Rights Certificates. The Company shall promptly notify the Rights Agent
in writing upon the occurrence of the Distribution Date and, if such notification is given orally,
the Company shall confirm same in writing on or prior to the next Business Day. Until such notice
is received by the Rights Agent, the Rights Agent may presume conclusively that the Distribution
Date has not occurred.




          (e) In the event that the Company purchases or otherwise acquires any shares of Common Stock
after the Record Date but prior to the Distribution Date, any Rights associated with such shares of
Common Stock shall be deemed cancelled and retired so that the Company




7









 







shall not be entitled to exercise any Rights associated with the shares of Common Stock so
purchased or acquired.




     Section 4 Form of Rights Certificates. The Rights Certificates (and the form of election to
purchase and the form of assignment and the certificates contained therein to be printed on the
reverse thereof) shall each be substantially in the form attached hereto as Exhibit B with
such changes and marks of identification or designation, and such legends, summaries or
endorsements printed thereon as the Company may deem appropriate and as are not inconsistent with
the provisions of this Agreement, or as may be required to comply with any applicable law or with
any rule or regulation made pursuant thereto or with any rule or regulation of any stock exchange
or transaction reporting system on which the Rights may from time to time be listed or quoted, or
to conform to usage. Subject to the provisions of Section 21 hereof, the Rights Certificates,
whenever distributed shall entitle the holders thereof to purchase such number of one
ten-thousandths of a share of Preferred Stock as is set forth therein at the Purchase Price;
provided, however, that the Purchase Price, the number and kind of securities
issuable upon exercise of each Right and the number of Rights outstanding shall be subject to
adjustment as provided in this Agreement.



     Section 5 Countersignature and Registration.



          (a) The Rights Certificates shall be executed on behalf of the Company by any Authorized
Officer, either manually or by facsimile signature, and shall have affixed thereto the Company’s
seal or a facsimile thereof, which shall be attested by any other Authorized Officer, either
manually or by facsimile signature. The Rights Certificates shall be countersigned by the Rights
Agent, either manually or by facsimile signature, and shall not be valid for any purpose unless so
countersigned. In case any officer of the Company who shall have signed any of the Rights
Certificates shall cease to be such officer of the Company before countersignature by the Rights
Agent and issuance and delivery by the Company, such Rights Certificates, nevertheless, may be
countersigned by the Rights Agent and issued and delivered by the Company with the same force and
effect as though the person who signed such Rights Certificates had not ceased to be such officer
of the Company; and any Rights Certificates may be signed on behalf of the Company by any person
who, at the actual date of the execution of such Rights Certificate, shall be a proper officer of
the Company to sign such Rights Certificate, although at the date of the execution of this
Agreement any such person was not such an officer.




          (b) Following the Distribution Date, upon receipt by the Rights Agent of written notice of the
occurrence of the Distribution Date pursuant to Section 3(d) hereof, the Rights Agent shall keep or
cause to be kept, at its office or offices designated for such purposes and at such other offices
as may be required to comply with any applicable law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any stock exchange or any transaction reporting system on
which the rights may from time to time be listed or quoted, books for registration and transfer of
the Rights Certificates issued hereunder. Such books shall show the names and addresses of the
respective holders of the Rights Certificates, the number of Rights evidenced on its face by each
of the Rights Certificates and the date of each of the Rights Certificates.




8









 








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



          (a) Subject to the provisions of Section 11(a)(ii) and Section 13 hereof, at any time after
the Close of Business on the Distribution Date, and prior to the Expiration Date, any Rights
Certificate(s) (other than Rights Certificates representing Rights that have been redeemed or
exchanged pursuant to Section 22 or Section 23 hereof) representing exercisable Rights may be
transferred, split-up, combined or exchanged for another Rights Certificate(s), entitling the
registered holder to purchase a like number of one ten-thousandths of a share of Preferred Stock
(or other securities, cash or other assets, as the case may be) as the Rights Certificate(s)
surrendered then entitled such holder (or former holder in the case of a transfer) to purchase.
Any registered holder desiring to transfer, split-up, combine or exchange any such Rights
Certificate(s) must make such request in writing delivered to the Rights Agent, and must surrender
the Rights Certificate(s) to be transferred, split-up, combined or exchanged, with the forms of
assignment and certificate contained therein duly executed, at the office or offices of the Rights
Agent designated for such purpose. The Rights Certificates are transferable only on the registry
books of the Rights Agent. Neither the Rights Agent nor the Company shall be obligated to take any
action whatsoever with respect to the transfer of any such surrendered Rights Certificate until the
registered holder shall have (i) completed and signed the certificate contained in the form of
assignment on the reverse side of such Rights Certificate, (ii) provided such additional evidence
of the identity of the Beneficial Owner (or former Beneficial Owner and the Affiliates and
Associates of such Beneficial Owner (or former Beneficial Owner) as the Company or the Rights Agent
shall reasonably request and (iii) paid a sum sufficient to cover any tax or charge that may be
imposed in connection with any transfer, split-up, combination or exchange or Rights Certificates
as required by Section 9(d) hereof. Thereupon the Rights Agent shall, subject to Section
11(a)(ii), Section 13 and Section 23 hereof, countersign and deliver to the Person entitled thereto
a Rights Certificate or Rights Certificates, as the case may be, as so requested registered in such
name or names as may be designated by the surrendering registered holder. The Rights Agent shall
promptly forward any such sum collected by it to the Company or to such Person or Persons as the
Company shall specify by written notice. The Rights Agent shall have no duty or obligation unless
and until it is satisfied that all such taxes and charges have been paid.




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




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



          (a) Subject to Section 11(a)(ii) hereof, at any time after the Distribution Date and prior to
the Expiration Date, the registered holder of any Rights Certificate may exercise the Rights
evidenced thereby (except as otherwise provided herein, including, without limitation, the




9









 







restrictions on exercisability as set forth in Section 9(e), Section 11(a)(iii), Section 22(a)
and Section 23(a) hereof) in whole or in part upon surrender of the Rights Certificate, with the
form of election to purchase and the certificate contained therein on the reverse side thereof duly
executed, to the Rights Agent at the office or agency of the Rights Agent designated for such
purpose, together with payment of the Purchase Price (including any applicable tax or charge
required to be paid by the holder of such Rights Certificate in accordance with the provisions of
Section 9(d) hereof) for each one ten-thousandth of a share of Preferred Stock (or other
securities, cash or other assets, as the case may be) as to which the Rights are exercised.




          (b) Upon receipt of a Rights Certificate representing exercisable Rights with the form of
election to purchase and the certificate contained therein properly completed and duly executed,
accompanied by payment of the Purchase Price for each one ten-thousandth of a share of Preferred
Stock (or other securities, cash or other assets, as the case may be) to be purchased and an amount
equal to any applicable tax or charge required to be paid under Section 9(d) hereof by certified
check, cashier’s check, bank draft or money order payable to the order of the Company, the Rights
Agent shall, subject to Section 19(j) hereof, thereupon promptly (i) (A) requisition from any
transfer agent of the shares of Preferred Stock (or make available, if the Rights Agent is the
transfer agent for such shares) certificates representing the total number of one ten-thousandths
of a share of Preferred Stock to be purchased (and the Company hereby irrevocably authorizes and
directs its transfer agent to comply with all such requests) or (B) if the Company shall have
elected to deposit any shares of Preferred Stock issuable upon exercise of the Rights hereunder
with a depositary agent, requisition from the depositary agent depositary receipts representing
such number of one ten-thousandths of a share of Preferred Stock as are to be purchased (and the
Company hereby irrevocably authorizes and directs such depositary agent to comply with all such
requests), (ii) after receipt of such certificates (or depositary receipts, as the case may be)
cause the same to be delivered to or upon the order of the registered holder of such Rights
Certificate, registered in such name or names as may be designated by such holder, (iii) when
appropriate, requisition from the Company or any transfer agent therefor of certificates
representing the number of equivalent shares to be issued in lieu of the issuance of shares of
Common Stock in accordance with the provisions of Section 11(a)(iii) hereof, (iv) when appropriate,
after receipt of such certificates, cause the same to be delivered to or upon the order of the
registered holder of such Rights Certificate, registered in such name or names as may be designated
by such holder, (v) when appropriate, requisition from the Company of the amount of cash to be paid
in lieu of the issuance of fractional shares in accordance with the provisions of Section 13
hereof, and (vi) when appropriate, after receipt, deliver such cash to the registered holder of
such Rights Certificate.




          (c) In case the registered holder of any Rights Certificate shall exercise less than all the
Rights evidenced thereby, the Rights Agent shall prepare, execute and deliver a new Rights
Certificate evidencing Rights equivalent to the Rights remaining unexercised to the registered
holder of such Rights Certificate or to such holder’s duly authorized assigns, subject to the
provisions of Section 13 hereof.




          (d) Notwithstanding anything in this Agreement to the contrary, neither the Rights Agent nor
the Company shall be obligated to undertake any action with respect to any purported transfer,
split-up, combination or exchange of any Rights Certificate pursuant to Section 6 hereof or
exercise or assignment of a Rights Certificate as set forth in this Section 7




10









 







unless the registered holder of such Rights Certificate shall have (i) duly and properly
completed and signed the certificate contained in the form of assignment or the form of election to
purchase, as applicable, set forth on the reverse side of the Rights Certificate surrendered for
such transfer, split-up, combination, exchange, exercise or assignment and (ii) provided such
additional evidence of the identity of the Beneficial Owner (or former Beneficial Owner) thereof
and of the Rights evidenced thereby and Affiliates and Associates thereof as the Company or the
Rights Agent may reasonably request.




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



     Section 9 Company Covenants Concerning Securities and Rights.



          (a) The Company covenants and agrees that it shall cause to be reserved, authorized for
issuance and kept available out of its authorized and unissued shares of Preferred Stock, a number
of shares of Preferred Stock that shall be sufficient to permit the exercise in full of all
outstanding Rights in accordance with Section 7 hereof.




          (b) The Company covenants and agrees so long as the shares of Preferred Stock (and, following
the occurrence of a Section 11(a)(ii) Event, shares of Common Stock or other securities, as the
case may be) issuable upon the exercise of the Rights may be listed on any national securities
exchange, or quoted on a quotation system, it shall endeavor to cause, from and after such time as
the Rights become exercisable, all securities reserved for issuance upon the exercise of Rights to
be listed on such exchange, or quoted on such quotation system, upon official notice of issuance
upon such exercise.




          (c) The Company covenants and agrees it will take all such actions as may be necessary to
ensure that all shares of Preferred Stock (and, following the occurrence of a Section 11(a)(ii)
Event, shares of Common Stock or other securities, as the case may be) delivered upon exercise of
Rights, at the time of delivery of the certificates for such securities, shall be (subject to
payment of the Purchase Price) duly authorized, validly issued, fully paid and nonassessable
securities.




          (d) The Company covenants and agrees it will pay when due and payable any and all federal and
state taxes and charges that may be payable in respect of the issuance or delivery of the Rights
Certificates and of any certificates representing securities issued upon the exercise of Rights;
provided, however, that the Company shall not be required to pay any tax or charge
which may be payable in respect of any transfer or delivery of Rights Certificates to a




11









 







person other than, or the issuance or delivery of certificates or depositary receipts
representing securities issued upon the exercise of Rights in a name other than that of, the
registered holder of the Rights Certificate evidencing Rights surrendered for exercise, or to issue
or deliver any certificates or depositary receipts representing securities issued upon the exercise
of any Rights until any such tax or charge has been paid (any such tax or charge being payable by
the holder of such Rights Certificate at the time of surrender) or until it has been established to
the Company’s reasonable satisfaction that no such tax or charge is due.




          (e) If the Company determines that registration under the Securities Act is required, then the
Company shall use commercially reasonable efforts (i) to file, as soon as practicable after the
Distribution Date, on an appropriate form, a registration statement under the Securities Act with
respect to the securities issuable upon exercise of the Rights, (ii) to cause such registration
statement to become effective as soon as practicable after such filing and (iii) to cause such
registration statement to remain effective (with a prospectus at all times meeting the requirements
of the Securities Act) until the earlier of (A) the date as of which the Rights are no longer
exercisable for such securities and (B) the Expiration Date. The Company shall also take such
action as may be appropriate under, or to ensure compliance with, the securities or “blue sky” laws
of the various states in connection with the exercisability of the Rights. The Company may
temporarily suspend, for a period of time not to exceed 90 calendar days after the date the Company
determines that registration is required, the exercisability of the Rights in order to prepare and
file such registration statement and to permit it to become effective or to qualify the rights, the
exercise thereof or the issuance of shares of Preferred Stock, Common Stock, or other securities
upon the exercise thereof under state securities or “blue sky” laws. Upon any such suspension, the
Company shall issue a public announcement stating that the exercisability of the Rights has been
temporarily suspended, as well as a public announcement at such time as the suspension is no longer
in effect. The Company shall notify the Rights Agent in writing whenever it makes a public
announcement pursuant to this Section 9(e) and give the Rights Agent a copy of such announcement.
In addition, if the Company determines that a registration statement or other document should be
filed under the Securities Act or any state securities laws following the Distribution Date, the
Company may temporarily suspend the exercisability of the Rights, for a period of time not to
exceed 90 calendar days after the date the Company makes such determination, in each relevant
jurisdiction, until such time as a registration statement has been declared effective or any such
other document filed and, if required, approved, and, upon any such suspension, the Company shall
issue a public announcement stating that the exercisability of the Rights has been temporarily
suspended, as well as a public announcement at such time as the suspension is no longer in effect.
Notwithstanding anything in this Agreement to the contrary, the Rights shall not be exercisable in
any jurisdiction if the requisite registration or qualification in such jurisdiction has not been
effected or the exercise of the Rights is not permitted under applicable law.




          (f) Notwithstanding anything in this Agreement to the contrary, after the later of the Stock
Acquisition Date and the Distribution Date, the Company shall not, except as permitted by Section
22 or Section 26 hereof, take (or permit any Subsidiary to take) any action if at the time such
action is taken it is reasonably foreseeable that such action shall eliminate or otherwise diminish
the benefits intended to be afforded by the Rights.




12









 








          (g) In the event that the Company is obligated to issue other securities of the Company, pay
cash or distribute other assets pursuant to Section 7, Section 11, Section 13, Section 22 or
Section 23 hereof, it shall make all arrangements necessary so that such other securities, cash or
other assets are available for distribution by the Rights Agent, if and when necessary to comply
with this Agreement.




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



     Section 11 Adjustment of Purchase Price, Number and Kind of Securities or Number of Rights.
The Purchase Price, the number of shares of Preferred Stock or other securities or property
purchasable upon exercise of each Right and the number of Rights outstanding are subject to
adjustment from time to time as provided in this Section 11.



          (a) (i) In the event the Company shall at any time after the Record Date (A) declare a
dividend on the shares of Preferred Stock payable in shares of Preferred Stock, (B) subdivide the
outstanding shares of Preferred Stock, (C) combine the outstanding shares of Preferred Stock into a
smaller number of shares of Preferred Stock or (D) issue any shares of its capital stock in a
reclassification of the shares of Preferred Stock (including any such reclassification in
connection with a consolidation or merger in which the Company is the continuing or surviving
corporation), except as otherwise provided in this Section 11(a), the Purchase Price in effect at
the time of the record date for such dividend or of the effective date of such subdivision,
combination or reclassification, as the case may be, and the number and kind of shares of capital
stock issuable on such date, shall be proportionately adjusted so that the holder of any Right
exercised after such time shall be entitled to receive, upon payment of the Purchase Price then in
effect, the aggregate number and kind of shares of capital stock which, if such Right had been
exercised immediately prior to such date (whether or not such Right was then exercisable) and at a
time when the transfer books of the Company for the shares of Preferred Stock (or other capital
stock, as the case may be) were open, the holder would have owned upon such exercise and been
entitled to receive by virtue of such dividend, subdivision, combination or reclassification;
provided, however, that in no event shall the consideration to be




13









 







paid upon the exercise of one Right be less than the aggregate par value of the shares of
capital stock of the Company issuable upon exercise of one Right.




               (ii) Subject to Section 22 and Section 23 of this Agreement and except as otherwise provided
in this Section 11(a)(ii) and Section 11(a)(iii) hereof, in the event that any Person becomes an
Acquiring Person (a “Section 11(a)(ii) Event”), each holder of a Right shall thereafter
have the right to receive, upon exercise thereof at a price equal to the then-current Purchase
Price, in accordance with the terms of this Agreement and in lieu of shares of Preferred Stock,
such number of shares of Common Stock (or at the option of the Company, such number of one
ten-thousandths of a share of Preferred Stock) as shall equal the result obtained by
(x) multiplying the then-current Purchase Price by the number of one ten-thousandths of a share of
Preferred Stock for which a Right was exercisable immediately prior to the first occurrence of a
Section 11(a)(ii) Event and dividing that product (which, following such first occurrence, shall
thereafter be referred to as the “Purchase Price” for each Right and for all purposes of
this Agreement) by (y) 50% of the Current Per Share Market Price of the Company’s Common Stock
(determined pursuant to Section 11(d) hereof) on the date of such first occurrence;
provided, however, that the Purchase Price (as so adjusted) and the number of
shares of Common Stock so receivable upon exercise of a Right shall thereafter be subject to
further adjustment as appropriate in accordance with Section 11(f) hereof.



     Notwithstanding anything in this Agreement to the contrary, however, from and after the first
occurrence of a Section 11(a)(ii) Event, any Rights that are beneficially owned by (A) any
Acquiring Person (or any Affiliate or Associate of any Acquiring Person), (B) a transferee of any
Acquiring Person (or any such Affiliate or Associate) who becomes a transferee after the occurrence
of such Person becoming an Acquiring Person or (C) a transferee of any Acquiring Person (or any
such Affiliate or Associate) who became a transferee prior to or concurrently with such Person
becoming an Acquiring Person pursuant to either (1) a transfer from the Acquiring Person (or any
such Affiliate or Associate) to holders of its equity securities or to any Person with whom the
Acquiring Person (or any such Affiliate or Associate) has any continuing agreement, arrangement or
understanding, written or otherwise, regarding the transferred Rights or (2) a transfer that the
Board has determined is part of a plan, arrangement or understanding, written or otherwise, which
has the purpose or effect of avoiding the provisions of this paragraph, shall be null and void
without any further action and any holder of such Rights shall thereafter have no rights whatsoever
with respect to such Rights, whether under any provision of this Agreement or otherwise. The
Company will use commercially reasonable efforts to ensure that the provisions of this
Section 11(a)(ii) are complied with, but shall have no liability to any holder of Rights
Certificates or other Person as a result of its failure to make any determinations with respect to
an Acquiring Person or its Affiliates, Associates or transferees hereunder. From and after the
occurrence of any Person becoming an Acquiring Person, no Right Certificates shall be issued
pursuant to Section 3 or Section 6 hereof that represents Rights that are or have become void
pursuant to the provisions of this paragraph, and any Right Certificates delivered to the Rights
Agent that represents Rights that are or have become void pursuant to the provisions of this
paragraph shall be cancelled.



               (iii) The Company may at its option substitute for a share of Common Stock issuable upon the
exercise of Rights in accordance with the foregoing Section 11(a)(ii) such number or fractions of
shares of Preferred Stock having an aggregate current market value



14









 




equal to the Current Per Share Market Price of a share of Common Stock. In the event that
there shall be an insufficient number of shares of Common Stock authorized but unissued (and
unreserved) to permit the exercise in full of the Rights in accordance with the foregoing
Section 11(a)(ii), the Board shall, with respect to such deficiency, to the extent not prohibited
by applicable law or any material agreements then in effect to which the Company is a party
(A) determine the excess of (1) the value of the shares of Common Stock issuable upon the exercise
of a Right in accordance with the foregoing Section 11(a)(ii) (the “Current Value”) over
(2) the then-current Purchase Price (such excess, the “Spread”), and (B) with respect to
each Right (other than Rights which have become void pursuant to Section 11(a)(ii)), make adequate
provision to substitute for the shares of Common Stock issuable in accordance with
Section 11(a)(ii) upon exercise of the Right and payment of the applicable Purchase Price,
(1) cash, (2) a reduction in the Purchase Price, (3) shares of Preferred Stock or other equity
securities of the Company (including, without limitation, shares or fractions of shares of
preferred stock which, by virtue of having dividend, voting and liquidation rights substantially
comparable to those of the shares of Common Stock, are deemed in good faith by the Board to have
substantially the same value as the shares of Common Stock, (4) debt securities of the Company,
(5) other assets or (6) any combination of the foregoing, having a value which, when added to the
value of the shares of Common Stock actually issued upon exercise of such Right, shall have an
aggregate value equal to the Current Value, where such aggregate value has been determined by the
Board (upon the advice of a nationally recognized investment banking firm selected by the Board in
good faith); provided, however, if the Company shall not make adequate provision to
deliver value pursuant to clause (B) above within 30 calendar days following the later of (x) the
first occurrence of a Section 11(a)(ii) Event and (y) the date on which the Company’s right of
redemption pursuant to Section 22(a) expires (the later of (x) and (y) being referred to herein as
the “Section 11(a)(ii) Trigger Date”), then the Company shall be obligated to deliver, to
the extent not prohibited by applicable law or any material agreements then in effect to which the
Company is a party, upon the surrender for exercise of a Right and without requiring payment of the
Purchase Price, shares of Common Stock (to the extent available), and then, if necessary, such
number or fractions of shares of Preferred Stock (to the extent available) and then, if necessary,
cash, which shares and cash have an aggregate value equal to the Spread. If within the 30-day
period referred to above the Board shall determine in good faith that it is likely that sufficient
additional shares of Common Stock could be authorized for issuance upon exercise in full of the
Rights, then, if the Board so elects, such 30-day period may be extended to the extent necessary,
but not more than 90 calendar days after the Section 11(a)(ii) Trigger Date, in order that the
Company may seek stockholder approval for the authorization of such additional shares (such 30-day
period, as it may be extended, is hereinafter called the “Substitution Period”). To the
extent that the Company determines that some action need be taken pursuant to the second or third
sentence of this Section 11(a)(iii), the Company (I) shall provide, subject to Section 11(a)(ii),
that such action shall apply uniformly to all outstanding Rights and (II) may suspend the
exercisability of the Rights until the expiration of the Substitution Period in order to seek any
authorization of additional shares or to decide the appropriate form of distribution to be made
pursuant to such second sentence and to determine the value thereof. In the event of any such
suspension, the Company shall issue a public announcement stating that the exercisability of the
Rights has been temporarily suspended, as well as a public announcement at such time as the
suspension is no longer in effect.




15









 








          (b) If the Company fixes a record date for the issuance of rights, options or warrants to all
holders of shares of Preferred Stock entitling them (for a period expiring within 45 calendar days
after such record date) to subscribe for or purchase shares of Preferred Stock (or securities
having equivalent rights, privileges and preferences as the shares of Preferred Stock (for purposes
of this Section 11(b), “Equivalent Preferred Stock”)) or securities convertible into shares
of Preferred Stock or Equivalent Preferred Stock at a price per share of Preferred Stock or
Equivalent Preferred Stock (or having a conversion price per share, if a security convertible into
shares of Preferred Stock or Equivalent Preferred Stock) less than the Current Per Share Market
Price of the shares of Preferred Stock (determined pursuant to Section 11(d) hereof) on such record
date, the Purchase Price to be in effect after such record date shall be determined by multiplying
the Purchase Price in effect immediately prior to such record date by a fraction, the numerator of
which is the number of shares of Preferred Stock outstanding on such record date plus the number of
shares of Preferred Stock which the aggregate offering price of the total number of shares of
Preferred Stock and Equivalent Preferred Stock so to be offered (or the aggregate initial
conversion price of the convertible securities so to be offered) would purchase at such Current Per
Share Market Price and the denominator of which is the number of shares of Preferred Stock
outstanding on such record date plus the number of additional shares of Preferred Stock and
Equivalent Preferred Shares to be offered for subscription or purchase (or into which the
convertible securities so to be offered are initially convertible); provided,
however, that in no event shall the consideration to be paid upon the exercise of one Right
be less than the aggregate par value of the shares of capital stock issuable upon exercise of one
Right. In case such subscription price may be paid in a consideration part or all of which is in a
form other than cash, the value of such consideration shall be as determined in good faith by the
Board, whose determination shall be described in a written statement filed with the Rights Agent.
Shares of Preferred Stock owned by or held for the account of the Company shall not be deemed
outstanding for the purpose of any such computation. Such adjustments shall be made successively
whenever such a record date is fixed, and in the event that such rights, options or warrants are
not so issued, the Purchase Price shall be adjusted to be the Purchase Price which would then be in
effect if such record date had not been fixed.




          (c) If the Company fixes a record date for the making of a distribution to all holders of
shares of Preferred Stock (including any such distribution made in connection with a consolidation
or merger in which the Company is the continuing or surviving corporation) of evidences of
indebtedness, cash (other than a regular periodic cash dividend), assets, stock (other than a
dividend payable in shares of Preferred Stock) or subscription rights, options or warrants
(excluding those referred to in Section 11(b) hereof), the Purchase Price to be in effect after
such record date shall be determined by multiplying the Purchase Price in effect immediately prior
to such record date by a fraction, the numerator of which is the Current Per Share Market Price of
the shares of Preferred Stock (as determined pursuant to Section 11(d) hereof) on such record date
or, if earlier, the date on which shares of Preferred Stock begin to trade on an ex-dividend or
when issued basis for such distribution, less the fair market value (as determined in good faith by
the Board, whose determination shall be described in a written statement filed with the Rights
Agent) of the portion of the evidences of indebtedness, cash, assets or stock so to be distributed
or of such subscription rights, options or warrants applicable to one share of Preferred Stock, and
the denominator of which is such Current Per Share Market Price of the shares of Preferred Stock;
provided, however, that in no event shall the consideration to be paid upon the
exercise of one Right but less than the aggregate par value of the shares of capital stock issuable
upon




16









 







exercise of one Right. Such adjustments shall be made successively whenever such a record
date is fixed; and in the event that such distribution is not so made, the Purchase Price shall
again be adjusted to be the Purchase Price which would then be in effect if such record date had
not been fixed.




          (d) (i) For the purpose of any computation hereunder, the “Current Per Share Market
Price” of a share of Common Stock on any date shall be deemed to be the average of the daily
closing prices per share of a share of Common Stock for the 30 consecutive Trading Days immediately
prior to, but not including, such date; provided, however, that in the event that
the Current Per Share Market Price of Common Stock is determined during a period following the
announcement by the Company of (A) a dividend or distribution on such shares of Common Stock
payable in shares of Common Stock or securities convertible into such shares (other than the
Rights) or (B) any subdivision, combination or reclassification of such shares of Common Stock, and
prior to the expiration of 30 Trading Days after, but not including, the ex-dividend date for such
dividend or distribution, or the record date for such subdivision, combination or reclassification,
then, and in each such case, the Current Per Share Market Price shall be appropriately adjusted to
take into account ex-dividend trading or to reflect the current per share market price per share
equivalent of such shares of Common Stock. The closing price for each day shall be the last sale
price, regular way, or, in case no such sale takes place on such day, the average of the closing
bid and asked prices, regular way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to trading on the New
York Stock Exchange or, if the Common Stock is not listed or admitted to trading on the New York
Stock Exchange, as reported in the principal consolidated transaction reporting system with respect
to securities listed on the principal national securities exchange on which the Common Stock is
listed or admitted to trading or, if the Common Stock is not listed or admitted to trading on any
national securities exchange, the last quoted price or, if not so quoted, the average of the high
bid and low asked prices in the over-the-counter market, as reported on a quotation system then in
use, or, if on any such date the Common Stock is not quoted by any such organization, the average
of the closing bid and asked prices as furnished by a professional market maker making a market in
the Common Stock selected by the Board. If the Common Stock is not publicly held or not so listed
or traded, or is not the subject of available bid and asked quotes, the Current Per Share Market
Price of such Common Stock shall mean the fair value per share as determined in good faith by the
Board, whose determination shall be described in a statement filed with the Rights Agent.




               (ii) For the purpose of any computation hereunder, the “Current Per Share Market
Price” of a share of Preferred Stock shall be determined in accordance with the method set
forth above in Section 11(d)(i) other than the last sentence thereof. If the Current Per Share
Market Price of Preferred Stock cannot be determined in the manner provided above, it shall be
conclusively deemed to be an amount equal to the current per share market price of the shares of
Common Stock multiplied by ten thousand (as such number may be appropriately adjusted to reflect
events such as stock splits, stock dividends, recapitalizations or similar transactions relating to
the shares of Common Stock occurring after the date of this Agreement). If neither the Common
Stock nor the Preferred Stock are publicly held or so listed or traded, or the subject of available
bid and asked quotes, “Current Per Share Market Price” of the Preferred Stock shall mean
the fair value per share as determined in good faith by the Board, whose determination shall be
described in a statement filed with the Rights Agent. For all purposes of



17









 







this Agreement, the current per share market price of one ten-thousandth of a Preferred Share
will be equal to the current per share market price of one Preferred Share divided by ten thousand.



          (e) Except as set forth below, no adjustment in the Purchase Price shall be required unless
such adjustment would require an increase or decrease of at least 1% in such Purchase Price;
provided, however, that any adjustments which by reason of this Section 11(e) are
not required to be made shall be carried forward and taken into account in any subsequent
adjustment. All calculations under this Section 11 shall be made to the nearest cent or to the
nearest one one-millionth of a share of Preferred Stock or one ten-thousandth of a share of Common
Stock or other security, as the case may be. Notwithstanding the first sentence of this
Section 11(e), any adjustment required by this Section 11 shall be made no later than the earlier
of (i) three years from the date of the transaction which requires such adjustment and (ii) the
Expiration Date.




          (f) If as a result of an adjustment made pursuant to Section 11(a) hereof, the holder of any
Right thereafter exercised becomes entitled to receive any securities of the Company other than
shares of Preferred Stock, thereafter the number or kind of such other securities so receivable
upon exercise of any Right (or the Purchase Price in respect thereof) shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the shares of Preferred Stock (and the Purchase Price in respect
thereof) contained in this Section 11, and the provisions of Section 7, Section 9, Section 10 and
Section 13 hereof with respect to the shares of Preferred Stock (and the Purchase Price in respect
thereof) shall apply on like terms to any such other securities (and the Purchase Price in respect
thereof).




          (g) All Rights originally issued by the Company subsequent to any adjustment made to the
Purchase Price hereunder shall evidence the right to purchase, at the adjusted Purchase Price, the
number of one ten-thousandths of a share of Preferred Stock issuable from time to time hereunder
upon exercise of the Rights, all subject to further adjustment as provided herein.




          (h) Unless the Company has exercised its election as provided in Section 11(i) hereof, upon
each adjustment of the Purchase Price pursuant to Section 11(b) or Section 11(c) hereof, each Right
outstanding immediately prior to the making of such adjustment shall thereafter evidence the right
to purchase, at the adjusted Purchase Price, that number of one ten-thousandths of a share of
Preferred Stock (calculated to the nearest one one-millionth of a share of Preferred Stock)
obtained by (i) multiplying (x) the number of one ten-thousandths of a share of Preferred Stock
issuable upon exercise of a Right immediately prior to such adjustment of the Purchase Price by
(y) the Purchase Price in effect immediately prior to such adjustment of the Purchase Price and
(ii) dividing the product so obtained by the Purchase Price in effect immediately after such
adjustment of the Purchase Price.




          (i) The Company may elect, on or after the date of any adjustment of the Purchase Price, to
adjust the number of Rights in substitution for any adjustment in the number of one ten-thousandths
of a share of Preferred Stock issuable upon the exercise of a Right. Each of the Rights
outstanding after such adjustment of the number of Rights shall be exercisable for




18









 







the number of one ten-thousandths of a share of Preferred Stock for which a Right was
exercisable immediately prior to such adjustment. Each Right held of record prior to such
adjustment of the number of Rights shall become that number of Rights (calculated to the nearest
one hundred-thousandth) obtained by dividing the Purchase Price in effect immediately prior to
adjustment of the Purchase Price by the Purchase Price in effect immediately after adjustment of
the Purchase Price. The Company shall make a public announcement of its election to adjust the
number of Rights, indicating the record date for the adjustment, and, if known at the time, the
amount of the adjustment to be made. The Company shall also, as promptly as practicable, notify
the Rights Agent in writing of same pursuant to Section 9(e) hereof and give the Rights Agent a
copy of such announcement. Such record date may be the date on which the Purchase Price is
adjusted or any day thereafter, but if the Rights Certificates have been issued, such record date
shall be at least ten calendar days later than the date of the public announcement. If Rights
Certificates have been issued, upon each adjustment of the number of Rights pursuant to this
Section 11(i), the Company shall, as promptly as practicable, cause to be distributed to holders of
record of Rights Certificates on such record date Rights Certificates evidencing, subject to the
provision of Section 13 hereof, the additional Rights to which such holders are entitled as a
result of such adjustment, or, at the option of the Company, shall cause to be distributed to such
holders of record in substitution and replacement for the Rights Certificates held by such holders
prior to the date of adjustment, and upon surrender thereof if required by the Company, new Rights
Certificates evidencing all the Rights to which such holders are entitled after such adjustment.
Rights Certificates so to be distributed shall be issued, executed, and countersigned in the manner
provided for herein (and may bear, at the option of the Company, the adjusted Purchase Price) and
shall be registered in the names of the holders of record of Rights Certificates on the record date
specified in the public announcement.




          (j) Without respect to any adjustment or change in the Purchase Price or the number or kind of
securities issuable upon the exercise of the Rights, the Rights Certificates theretofore and
thereafter issued may continue to express the Purchase Price and the number and kind of securities
which were expressed in the initial Rights Certificate issued hereunder.




          (k) Before taking any action that would cause an adjustment reducing the Purchase Price below
one ten-thousandth of the then par value, if any, of the shares of Preferred Stock or below the
then par value, if any, of any other securities of the Company issuable upon exercise of the
Rights, the Company shall take any corporate action which may, in the opinion of its counsel, be
necessary in order that the Company may validly and legally issue fully paid and nonassessable
shares of Preferred Stock or such other securities, as the case may be, at such adjusted Purchase
Price.




          (l) In any case in which this Section 11 otherwise requires that an adjustment in the Purchase
Price be made effective as of a record date for a specified event, the Company may elect to defer
until the occurrence of such event the issuance to the holder of any Right exercised after such
record date of the number of one ten-thousandths of a share of Preferred Stock or other securities
of the Company, if any, issuable upon such exercise over and above the number of one
ten-thousandths of a share of Preferred Stock or other securities of the Company, if any, issuable
upon such exercise on the basis of the Purchase Price in effect prior to such adjustment;
provided, however, that the Company delivers to such holder a due bill or other




19









 







appropriate instrument evidencing such holder’s right to receive such additional shares of
Preferred Stock or other securities upon the occurrence of the event requiring such adjustment.




          (m) Notwithstanding anything in this Agreement to the contrary, the Company shall be entitled
to make such reductions in the Purchase Price, in addition to those adjustments expressly required
by this Section 11, as and to the extent that in its good faith judgment the Board determines to be
necessary or advisable in order that any (i) consolidation or subdivision of the shares of
Preferred Stock, (ii) issuance wholly for cash of shares of Preferred Stock at less than the
Current Per Share Market Price therefor, (iii) issuance wholly for cash of shares of Preferred
Stock or securities which by their terms are convertible into or exchangeable for shares of
Preferred Stock, (iv) stock dividends or (v) issuance of rights, options or warrants referred to in
this Section 11, hereafter made by the Company to holders of its shares of Preferred Stock is not
taxable to such stockholders.




          (n) Notwithstanding anything in this Agreement to the contrary, in the event that the Company
at any time after the Record Date and prior to the Distribution Date (i) pays a dividend on the
outstanding shares of Common Stock payable in shares of Common Stock, (ii) subdivides the
outstanding shares of Common Stock, (iii) combines the outstanding shares of Common Stock into a
smaller number of shares or (iv) issues any shares of its capital stock in a reclassification of
the outstanding shares of Common Stock (including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing or surviving corporation), the
number of Rights associated with each share of Common Stock then outstanding, or issued or
delivered thereafter but prior to the Distribution Date (or issued or delivered on or after the
Distribution Date pursuant to Section 21 hereof), shall be proportionately adjusted so that the
number of Rights thereafter associated with each share of Common Stock following any such event
equals the result obtained by multiplying the number of Rights associated with each share of Common
Stock immediately prior to such event by a fraction the numerator of which is the total number of
shares of Common Stock outstanding immediately prior to the occurrence of the event and the
denominator of which is the total number of shares of Common Stock outstanding immediately
following the occurrence of such event. The adjustments provided for in this Section 11(n) shall
be made successively whenever such a dividend is paid or such a subdivision, combination or
reclassification is effected.




     Section 12 Certificate of Adjusted Purchase Price or Number of Shares. Whenever an adjustment
is made or any event affecting the Rights or their exercisability (including, without limitation,
an event which causes Rights to become null and void) occurs as provided in Section 11 thereof, the
Company shall promptly (a) prepare a certificate setting forth such adjustment and a brief
statement of the facts and calculations accounting for such adjustment or describing such event,
(b) file with the Rights Agent, and with each transfer agent for the shares of Preferred Stock and
the shares of Common Stock, a copy of such certificate, and (c) if a Distribution Date has
occurred, give a brief summary thereof to each holder of a Rights Certificate in accordance with
Section 25 hereof. The Rights Agent shall be fully protected in relying on any such certificate
and on any adjustment therein contained and shall not be deemed to have knowledge of any such
adjustment unless and until it shall have received such certificate, provided,
however, that the Rights Agent will not be entitled to such protection in cases of bad
faith or willful misconduct.



20









 





     Section 13 Fractional Rights and Fractional Shares.



          (a) The Company shall not be required to issue fractions of Rights, except prior to the
Distribution Date as provided in Section 11(n) hereof, or to distribute Rights Certificates which
evidence fractional Rights. In lieu of such fractional Rights, the Company shall pay to the
registered holders of the Rights Certificates with regard to which such fractional Rights would
otherwise be issuable, an amount in cash equal to the same fraction of the current market value of
one Right. For purposes of this Section 13(a), the current market value of one Right is the
closing price of the Rights for the Trading Day immediately prior to the date on which such
fractional Rights would have been otherwise issuable. The closing price for any Trading Day shall
be the last sale price, regular way, or, in case no such sale takes place on such day, the average
of the closing bid and asked prices, regular way, in either case as reported in the principal
consolidated transaction reporting system with respect to securities listed or admitted to trading
on the New York Stock Exchange or, if the Rights are not listed or admitted to trading on the New
York Stock Exchange, as reported in the principal consolidated transaction reporting system with
respect to securities listed on the principal national securities exchange on which the Rights are
listed or admitted to trading or, if the Rights are not listed or admitted to trading on any
national securities exchange, the last quoted price or, if not so quoted, the average of the high
bid and low asked prices in the over-the-counter market, as reported on a quotation system then in
use or, if on any such date the Rights are not quoted, the average of the closing bid and asked
prices as furnished by a professional market maker making a market in the Rights, such market maker
to be selected by the Board. If the Rights are not publicly held or are not so listed or traded,
or are not the subject of available bid and asked quotes, the current market value of one Right
shall mean the fair value thereof as determined in good faith by the Board, whose determination
shall be described in a statement filed with the Rights Agent.




          (b) The Company shall not be required to issue fractions of shares of Preferred Stock (other
than fractions which are integral multiples of one ten-thousandth of a share of Preferred Stock)
upon exercise of the Rights or to distribute certificates which evidence fractional shares of
Preferred Stock (other than fractions which are integral multiples of one ten-thousandth of a share
of Preferred Stock). Fractions of Preferred Stock in integral multiples of one ten-thousandth of
such Preferred Stock may, in the sole discretion of the Company, be evidenced by depositary
receipts pursuant to an appropriate agreement between the Company and a depositary selected by it,
provided that such agreement provides that the holders of such depositary receipts have all the
rights, privileges and preferences to which they are entitled as Beneficial Owners of the Preferred
Stock represented by such depositary receipts. In lieu of fractional shares of Preferred Stock
that are not integral multiples of one ten-thousandth of a share of Preferred Stock, the Company
may pay to the registered holders of Rights Certificates at the time such Rights are exercised as
herein provided an amount in cash equal to the same fraction of the current market value of one
ten-thousandth of a share of Preferred Stock. For purposes of this Section 13(b), the current
market value of one ten-thousandth of a share of Preferred Stock shall be one ten-thousandth of the
closing price of a share of Preferred Stock (as determined pursuant to Section 11(d)(ii) hereof)
for the Trading Day immediately prior to the date of such exercise; provided,
however, that if the closing price of the shares of the Preferred Stock cannot be so
determined, the closing price of the shares of the Preferred Stock for such Trading Day shall be
conclusively deemed to be an amount equal to the closing price of the shares of Common Stock for
such Trading Day multiplied by ten thousand (as such number may




21









 







be appropriately adjusted to reflect events such as stock splits, stock dividends,
recapitalizations or similar transactions relating to the Common Stock shares occurring after the
date of this Agreement).




          (c) Following the occurrence of a Section 11(a)(ii) Event, the Company shall not be required
to issue fractions of shares of Common Stock upon exercise or exchange of the Rights or to
distribute certificates or Ownership Statements which evidence fractional shares of Common Stock.
In lieu of issuing any such fractional shares of Common Stock, the Company may pay to any Person to
whom or which such fractional shares of Common Stock would otherwise be issuable an amount in cash
equal to the same fraction of the current market value of one such share of Common Stock. For
purposes of this Section 13(c), the current market value of one share of Common Stock shall be the
closing price thereof (as determined pursuant to Section 11(d)(i) hereof) on the Trading Day
immediately prior to the date of such exercise or exchange.




          (d) The holder of a Right by the acceptance of the Rights expressly waives such holder’s right
to receive any fractional Rights or any fractional shares upon exercise of a Right, except as
permitted by this Section 13.




     Section 14 Rights of Action.



          (a) All rights of action in respect of this Agreement, excepting the rights of action given to
the Rights Agent hereunder, are vested in the respective registered holders of the Rights
Certificates (or, prior to the Distribution Date, the registered holders of shares of Common
Stock); and any registered holder of any Rights Certificate (or, prior to the Distribution Date, of
the shares of Common Stock), without the consent of the Rights Agent or of the holder of any other
Rights Certificate (or, prior to the Distribution Date, of the shares of Common Stock), may, on
such first holder’s behalf and for such first holder’s own benefit, enforce, and may institute and
maintain any suit, action or proceeding against the Company to enforce, or otherwise act in respect
of, such first holder’s right to exercise the Rights evidenced by such Rights Certificate in the
manner provided in such Rights Certificate and in this Agreement. Without limiting the foregoing
or any remedies available to the holders of Rights, it is specifically acknowledged that the
holders of Rights would not have an adequate remedy at law for any breach of this Agreement and
shall be entitled to specific performance of the obligations hereunder and injunctive relief
against actual or threatened violations of the obligations hereunder of any Person subject to this
Agreement.




          (b) Notwithstanding anything in this Agreement to the contrary, neither the Company nor the
Rights Agent shall have any liability to any holder of a Right or other Person as a result of its
inability to perform any of its obligations under this Agreement by reason of any preliminary or
permanent injunction or other order, judgment, decree or ruling (whether interlocutory or final)
issued by a court of competent jurisdiction or by a governmental regulatory, self-regulatory or
administrative agency or commission, or any statute, rule, regulation, or executive order
promulgated or enacted by any governmental authority, prohibiting or otherwise restraining
performance of such obligation; provided, however, that the Company shall use
commercially reasonable efforts to have any such injunction, order, judgment, decree or ruling
lifted or otherwise overturned as soon as possible.




22









 








     Section 15 Agreement of Rights Holders. Every holder of a Right, by accepting the same,
consents and agrees with the Company and the Rights Agent and with every other holder of a Right
that:



          (a) prior to the Distribution Date, the Rights shall be transferable only in connection with
the transfer of shares of Common Stock;




          (b) after the Distribution Date, the Rights Certificates are transferable only on the registry
books of the Rights Agent if surrendered at the principal office or offices of the Rights Agent
designated for such purposes, duly endorsed or accompanied by a properly executed instrument of
transfer with the appropriate forms and certificates contained therein fully executed;




          (c) subject to Section 6(a) and Section 7(d) hereof, the Company and the Rights Agent may deem
and treat the Person in whose name a Rights Certificate (or, prior to the Distribution Date, the
associated Common Stock share certificate or Ownership Statement) is registered as the absolute
owner thereof and of the Rights evidenced thereby (notwithstanding any notations of ownership or
writing on the Rights Certificates or the associated Common Stock share certificate or Ownership
Statement made by anyone other than the Company or the Rights Agent) for all purposes whatsoever,
and neither the Company nor the Rights Agent, subject to the penultimate sentence of Section
11(a)(ii) hereof, shall be affected by any notice to the contrary; and




          (d) such holder expressly waives any right to receive any fractional Rights and any fractional
securities upon exercise or exchange of a Right, except as otherwise provided in Section 13 hereof.




     Section 16 Rights Certificate Holder Not Deemed a Stockholder. No holder, of any Rights
Certificate, by means of such possession, shall be entitled to vote, receive dividends or be deemed
for any purpose the holder of the number of one ten-thousandths of a share of Preferred Stock or
any other securities of the Company which may at any time be issuable on the exercise of the Rights
represented thereby, nor shall anything contained herein or in any Rights Certificate be construed
to confer upon the holder of any Rights Certificate, by means of such possession, any of the rights
of a stockholder of the Company including any right to vote on any matter submitted to stockholders
at any meeting thereof, including the election of directors, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting stockholders (except
as provided in Section 24 hereof), or to receive dividends or subscription rights, or otherwise,
until the Right or Rights evidenced by such Rights Certificate have been exercised in accordance
with the provisions of this Agreement.



     Section 17 Concerning the Rights Agent.



          (a) The Company agrees to pay to the Rights Agent reasonable compensation for all services
rendered by it hereunder, and, from time to time, on demand of the Rights Agent, its reasonable
expenses and counsel fees and other disbursements incurred in the preparation, administration and
execution of this Agreement and the exercise and performance of its duties hereunder. The Company
also agrees to indemnify the Rights Agent for, and to hold it harmless




23









 







against, any loss, liability, damage, judgment, fine, penalty, claim, demand, cost or expense
incurred without gross negligence, bad faith or willful misconduct on the part of the Rights Agent,
for anything done or omitted by the Rights Agent in connection with the acceptance and
administration of this Agreement and the performance of its duties and responsibilities and the
exercise of its rights hereunder, including the costs and expenses of defending against any claim
of liability arising therefrom, directly or indirectly. The costs and expenses of enforcing this
right of indemnification will also be paid by the Company. The provisions of this Section 17 shall
survive the exercise, exchange, redemption or expiration of the Rights, the resignation,
replacement or removal of the Rights Agent and the termination of this Agreement.




          (b) The Rights Agent may conclusively rely on, and will be protected and shall incur no
liability for or in respect of any action taken, suffered or omitted by it in connection with, its
acceptance or administration of this Agreement and the exercise and performance of its duties and
responsibilities and the exercise of its rights hereunder, in reliance upon any Rights Certificate
or certificate evidencing shares of Preferred Stock, Common Stock or other securities of the
Company or an Ownership Statement, or any instrument of assignment or transfer, power of attorney,
endorsement, affidavit, letter, notice, direction, consent, certificate, statement, or other paper
or document believed by it to be genuine and to be signed, executed and, where necessary, verified
or acknowledged, by the proper Person or Persons, or otherwise upon the advice of counsel as set
forth in Section 19 hereof.




          (c) Notwithstanding anything in this Agreement to the contrary, in no event will the Rights
Agent be liable for special, indirect or consequential loss or damage of any kind whatsoever
(including but not limited to lost profits), even if the Rights Agent has been advised of the
likelihood of such loss or damage and regardless of the form of action.




     Section 18 Merger, Consolidation or Change of Name of the Rights Agent.



          (a) Any Person into which the Rights Agent or any successor Rights Agent may be merged or with
which it may be consolidated, or any Person resulting from any merger or consolidation to which the
Rights Agent or any successor Rights Agent is a party, or any Person succeeding to the corporate
trust, stock transfer or other shareholder services business of the Rights Agent or any successor
Rights Agent will be the successor to the Rights Agent under this Agreement without the execution
or filing of any paper or any further act on the part of any of the parties hereto; provided that
such Person would be eligible for appointment as a successor Rights Agent under the provisions of
Section 20 hereof. If at the time such successor Rights Agent shall succeed to the agency created
by this Agreement any of the Rights Certificates shall have been countersigned but not delivered,
any such successor Rights Agent may adopt the countersignature of a predecessor Rights Agent and
deliver such Rights Certificates so countersigned; and if at that time any of the Rights
Certificates shall not have been countersigned, any successor Rights Agent may countersign such
Rights Certificates either in the name of the predecessor or in the name of the successor Rights
Agent; and in all such cases such Rights Certificates shall have the full force provided in the
Rights Certificates and in this Agreement.




          (b) If at any time the name of the Rights Agent changes and at such time any of the Rights
Certificates have been countersigned but not delivered, the Rights Agent may adopt




24









 







the countersignature under its prior name and deliver Rights Certificates so countersigned;
and if at that time any of the Rights Certificates have not been countersigned, the Rights Agent
may countersign such Rights Certificates either in its prior name or in its changed name; and in
all such cases such Rights Certificates shall have the full force provided in the Rights
Certificates and in this Agreement.




     Section 19 Duties of the Rights Agent. The Rights Agent undertakes to perform the duties and
obligations expressly imposed by this Agreement (and no implied duties) upon the following terms
and conditions, by all of which the Company and the holders of Rights Certificates, by their
acceptance thereof, shall be bound:



          (a) The Rights Agent may consult with competent legal counsel (who may be legal counsel for
the Company), and the advice or opinion of such counsel shall be full and complete authorization
and protection to the Rights Agent and the Rights Agent shall incur no liability for or in respect
of any action taken, suffered or omitted by it in good faith and in accordance with the content of
such advice or opinion.




          (b) Whenever in the performance of its duties under this Agreement the Rights Agent shall deem
it necessary or desirable that any fact or matter (including, without limitation, the identity of
any Acquiring Person and the determination of the Current Per Share Market Price) be proved or
established by the Company prior to taking, suffering or omitting to take any action hereunder,
such fact or matter (unless other evidence in respect thereof be herein specifically prescribed)
may be deemed to be conclusively proved and established by a certificate signed by any Authorized
Officer and delivered to the Rights Agent; and such certificate, pursuant to its terms, shall be
full and complete authorization and protection to the Rights Agent for any action taken or suffered
in good faith by it under the provisions of this Agreement in reliance upon such certificate.




          (c) The Rights Agent shall be liable hereunder only for its own gross negligence, bad faith or
willful misconduct.




          (d) The Rights Agent shall not be liable for or by reason of any of the statements of fact or
recitals contained in this Agreement or in the Rights Certificates (except its countersignature
thereof) and it shall not be required to verify the same, but all such statements and recitals are
and shall be deemed to have been made by the Company only.




          (e) The Rights Agent will have no liability in respect of the validity of this Agreement or
the execution and delivery hereof (except the due execution and delivery hereof by the Rights
Agent) or in respect of the validity or execution of any Rights Certificate (except its
countersignature thereof); nor shall it be responsible for any breach by the Company of any
covenant contained in this Agreement or in any Rights Certificate; nor shall it be responsible for
any adjustment required under the provisions of Section 11, Section 22 or Section 23 hereof or
responsible for the manner, method or amount of any such adjustment or the ascertaining of the
existence of facts that would require any such adjustment (except with respect to the exercise of
Rights evidenced by Rights Certificates after actual notice of any such adjustment); nor shall it
by any act hereunder be deemed to make any representation or warranty as to the authorization or
reservation of any shares of Common Stock or Preferred Stock to be issued pursuant to this




25









 







Agreement or any Rights Certificate or as to whether any shares of Common Stock or Preferred
Stock shall, when so issued, be validly authorized and issued, fully paid and nonassessable.




          (f) The Company agrees that it shall perform, execute, acknowledge and deliver or cause to be
performed, executed, acknowledged and delivered all such further and other acts, instruments and
assurances as may reasonably be required by the Rights Agent for the carrying out or performing by
the Rights Agent of the provisions of this Agreement.




          (g) The Rights Agent is hereby authorized and directed to accept instructions with respect to
the performance of its duties and the exercise of the rights hereunder from any Authorized Officer,
and to apply to any such Authorized Officer for advice or instructions in connection with its
duties, and it shall not be liable for any action taken or suffered by it in good faith in
accordance with instructions of any such Authorized Officer or for any delay in acting while
waiting for those instructions. Any application by the Rights Agent for written instructions from
the Company may, at the option of the Rights Agent, set forth in writing any action proposed to be
taken or omitted by the Rights Agent under this Agreement and the date on or after which such
action shall be taken or such omission shall be effective. The Rights Agent shall not be liable
for any action taken by, or omission of, the Rights Agent in accordance with a proposal included in
any such application on or after the date specified in such application (which date shall not be
less than five Business Days after the date any Authorized Officer of the Company actually receives
such application, unless any such Authorized Officer shall have consented in writing to an earlier
date) unless, prior to taking any such action (or the effective date in the case of an omission),
the Rights Agent shall have received written instructions in response to such application
specifying the action to be taken or omitted.




          (h) The Rights Agent and any stockholder, director, officer or employee of the Rights Agent
may buy, sell or deal in any of the Rights or other securities of the Company or become pecuniarily
interested in any transaction in which the Company may be interested, or contract with or lend
money to the Company or otherwise act as fully and freely as though it were not the Rights Agent
under this Agreement. Nothing herein shall preclude the Rights Agent from acting in any other
capacity for the Company or for any other Person.




          (i) The Rights Agent may execute and exercise any of the rights or powers hereby vested in it
or perform any duty hereunder either itself (through its directors, officers or employees) or by or
through its attorneys or agents, and the Rights Agent shall not be answerable or accountable for
any act, omission, default, neglect or misconduct of any such attorneys or agents or for any loss
to the Company or any other Person resulting from any such act, default, neglect or misconduct,
provided reasonable care was exercised in the selection and continued employment thereof.




          (j) If, with respect to any Rights Certificate surrendered to the Rights Agent for exercise or
transfer, the certificate contained in the form of assignment or the form of election to purchase
set forth on the reverse thereof, as the case may be, has not been completed or indicates an
affirmative response to clause 1 or 2 thereof, the Rights Agent shall not take any further action
with respect to such requested exercise or transfer without first consulting with the Company.




26









 








          (k) No provision of this Agreement shall require the Rights Agent to expend or risk its own
funds or otherwise incur any financial liability in the performance of any of its duties hereunder
or in the exercise of its rights if there shall be reasonable grounds for believing that repayment
of such funds or adequate indemnification against such risk or liability is not reasonably assured
to it.




          (l) The Rights Agent will not be required to take notice or be deemed to have notice of any
fact, event or determination (including, without limitation, any dates or events defined in this
Agreement or the designation of any Person as an Acquiring Person, Affiliate or Associate) under
this Agreement unless and until the Rights Agent is specifically notified in writing by the Company
of such fact, event or determination.




          (m) The provisions of this Section 19 shall survive the exercise, exchange, redemption or
expiration of the Rights, the resignation, replacement or removal of the Rights Agent and the
termination of this Agreement.




     Section 20 Change of the Rights Agent. The Rights Agent or any successor Rights Agent may
resign and be discharged from its duties under this Agreement upon 30 calendar days’ written notice
given to the Company in accordance with Section 25 hereof, and to each transfer agent of the shares
of Common Stock and Preferred Stock known to the Rights Agent, respectively, by registered or
certified mail, and, if such resignation occurs after the Distribution Date, to the registered
holders of the Rights Certificates in accordance with Section 25 hereof. The Company may remove
the Rights Agent or any successor Rights Agent upon 30 calendar days’ written notice, given to the
Rights Agent or successor Rights Agent, as the case may be, in accordance with Section 25 hereof,
and to each transfer agent of the shares of Common Stock and the Preferred Stock, by registered or
certified mail, and, if such removal occurs after the Distribution Date, to the holders of the
Rights Certificates in accordance with Section 25 hereof. If the Rights Agent shall resign or be
removed or shall otherwise become incapable of acting, the Company shall, in its sole discretion,
appoint a successor to the Rights Agent. If the Company shall fail to make such appointment within
a period of 30 calendar days after giving notice of such removal or after it has been notified in
writing of such resignation or incapacity by the resigning or incapacitated Rights Agent or by the
holder of a Rights Certificate (who shall, with such notice, submit such holder’s Rights
Certificate for inspection by the Company), then any registered holder of any Rights Certificate
may apply to any court of competent jurisdiction for the appointment of a new Rights Agent. Any
successor Rights Agent, whether appointed by the Company or by such a court, shall be (a) a legal
business entity organized and doing business under the laws of the United States or of the State of
New York or of any other state of the United States, in good standing, which is authorized under
such laws to exercise corporate trust, stock transfer or shareholder services powers and which has
at the time of its appointment as Rights Agent a combined capital and surplus of at least
$100,000,000 or (b) an affiliate of a legal business entity described in clause (a) of this
sentence. After appointment, the successor Rights Agent shall be vested with the same powers,
rights, duties and responsibilities as if it had been originally named as Rights Agent without
further act or deed; but the predecessor Rights Agent shall deliver and transfer to the successor
Rights Agent any property at the time held by it hereunder, and execute and deliver any further
assurance, conveyance, act or deed necessary for the purpose. Not later than the effective date of
any such appointment, the Company shall file notice thereof in writing with the predecessor Rights
Agent and each transfer agent of the shares



27









 







of Common Stock and the Preferred Stock, and, if such appointment occurs after the
Distribution Date, give a notice thereof in writing to the registered holders of the Rights
Certificates in accordance with Section 25 hereof. Failure to give any notice provided for in this
Section 20, however, or any defect therein, shall not affect the legality or validity of the
resignation or removal of the Rights Agent or the appointment of the successor Rights Agent, as the
case may be.



     Section 21 Issuance of New Rights Certificates. Notwithstanding any of the provisions of this
Agreement or of the Rights to the contrary, the Company may, at its option, issue new Rights
Certificates evidencing Rights in such form as may be approved by the Board to reflect any
adjustment or change in the Purchase Price and the number or kind or class of shares or other
securities or property purchasable under the Rights Certificates made in accordance with the
provisions of this Agreement. In addition, in connection with the issuance or sale by the Company
of shares of Common Stock following the Distribution Date and prior to the Expiration Date, the
Company (a) shall, with respect to shares of Common Stock so issued or sold pursuant to the
exercise of stock options or under any employee plan or arrangement, granted or awarded as of the
Distribution Date, or upon the exercise, exchange or conversion of securities hereinafter issued by
the Company and (b) may, in any other case, if deemed necessary or appropriate by the Board, issue
Rights Certificates representing the appropriate number of Rights in connection with such issuance
or sale; provided, however, that (i) no such Rights Certificate shall be issued if,
and to the extent that, in its good faith judgment the Board determines that the issuance of such
Rights Certificate could have a material adverse tax consequence to the Company or to the Person to
whom or which such Rights Certificate otherwise would be issued, and (ii) no such Rights
Certificate shall be issued if, and to the extent that, appropriate adjustment shall otherwise have
been made in lieu of the issuance thereof.



     Section 22 Redemption.



          (a) The Board may, at any time prior to the Close of Business on the tenth calendar day
following the Stock Acquisition Date, redeem all but not less than all of the then-outstanding
Rights at the Redemption Price. Notwithstanding anything contained in this Agreement to the
contrary, the Rights shall not be exercisable after the first occurrence of a Section 11(a)(ii)
Event until such time as the right of redemption has expired. The redemption of the Rights may be
made effective at such time, on such basis and with such conditions as the Board in its sole
discretion may establish. The Company may, at its option, pay the Redemption Price in cash,
securities or any other form of consideration deemed appropriate by the Board.




          (b) Immediately upon the effectiveness of the action of the Board ordering the redemption of
the Rights, and without any further action and without any notice, the right to exercise the Rights
shall terminate and the only right thereafter of the holders of Rights shall be to receive the
Redemption Price for each Right so held without interest thereon. Promptly after the effectiveness
of the redemption of the Rights, the Company shall give notice of such redemption to the Rights
Agent and the holders of the then outstanding Rights in accordance with Section 25 hereof;
provided, however, that the failure to give, or any defect in, any such notice will
not affect the validity of the redemption of the Rights. Any notice given in accordance with
Section 25 hereof shall be deemed given, whether or not the holder receives the




28









 







notice. Each such notice of redemption shall state the method by which the payment of the
Redemption Price shall be made.




     Section 23 Exchange.



          (a) The Board may, at its option, at any time after a Section 11(a)(ii) Event, exchange all or
part of the then-outstanding and exercisable Rights (which shall not include Rights that have
become void pursuant to the provisions of Section 11(a)(ii) hereof) for shares of Common Stock at
an exchange ratio of one share of Common Stock per Right, appropriately adjusted to reflect any
stock split, stock dividend or similar transaction occurring after the date hereof (such amount per
Right being hereinafter referred to as the “Exchange Ratio”). The exchange of the Rights
by the Board may be made effective at such time, on such basis and with such conditions as the
Board in its sole discretion may establish.




          (b) Immediately upon the effectiveness of the action of the Board ordering the exchange of any
Rights and without any further action and without any notice, the right to exercise such Rights
shall terminate and the only right thereafter of a holder of such Rights shall be to receive that
number of shares of Common Stock equal to the number of such Rights held by such holder multiplied
by the Exchange Ratio. The Company shall promptly give public notice of any such exchange;
provided, however, that the failure to give, or any defect in, such notice shall
not affect the validity of such exchange. The Company shall promptly give a notice of any such
exchange to all of the holders of the Rights so exchanged in accordance with Section 25 hereof.
Any notice given in accordance with Section 25 hereof shall be deemed given, whether or not the
holder receives the notice. Each such notice of exchange will state the method by which the
exchange of the shares of Common Stock, for Rights shall be effected and, in the event of any
partial exchange, the number of Rights which will be exchanged. Any partial exchange shall be
effected pro rata based on the number of Rights (other than Rights which have become void pursuant
to the provisions of Section 11(a)(ii) hereof) held by each holder of Rights.




          (c) The Company may at its option substitute and, in the event that there shall not be
sufficient shares of Common Stock issued but not outstanding or authorized but unissued (and
unreserved) to permit an exchange of Rights as contemplated in accordance with this Section 23, the
Company shall substitute to the extent of such insufficiency, for each share of Common Stock that
would otherwise be issuable upon exchange of a Right, a number of shares of Preferred Stock or
fraction thereof (or Equivalent Preferred Stock) such that the Current Per Share Market Price of
one share of Preferred Stock (or Equivalent Preferred Stock) multiplied by such number or fraction
is equal to the Current Per Share Market Price of the Common Stock that would otherwise be issuable
as of the date of such exchange.




          (d) Prior to effecting an exchange pursuant to this Section 23, the Board may direct the
Company to enter into a trust agreement in such form and with such terms as the Board shall then
approve (the “Trust Agreement”). If the Board so directs, the Company shall enter into the
Trust Agreement and shall issue to the trust created by such agreement (the “Trust”) all of
the shares of Common Stock, Preferred Stock or other securities, if any, issuable pursuant to the
exchange, and all Persons entitled to receive such shares or other securities (and any dividends or
distributions made thereon after the date on which such shares or other securities




29









 







are deposited in the Trust) shall be entitled to receive such only from the Trust and solely
upon compliance with the relevant terms and provisions of the Trust Agreement.




     Section 24 Notice of Certain Events.



          (a) If the Company, at any time after the Distribution Date, proposes to (i) pay any dividend
payable in stock of any class to the holders of shares of Preferred Stock or to make any other
distribution to the holders of shares of Preferred Stock (other than a regular periodic cash
dividend), (ii) offer to the holders of shares of Preferred Stock rights, options, warrants or any
similar instrument to subscribe for or to purchase any additional shares of Preferred Stock or
shares of stock of any class or any other securities, rights or options, (iii) effect any
reclassification of its Preferred Stock (other than a reclassification involving only the
subdivision of outstanding shares of Preferred Stock), (iv) effect any consolidation, merger or
statutory share exchange into or with any other Person, or (v) to effect the liquidation,
dissolution or winding up of the Company, then, in each such case, the Company shall give to the
Rights Agent and, to the extent possible, to each holder of a Rights Certificate, in accordance
with Section 25 hereof, a notice of such proposed action, which shall specify the record date for
the purposes of such stock dividend, distribution or offering of rights, warrants, options or any
similar instrument or the date on which such reclassification, consolidation, merger, share
exchange, sale, transfer, liquidation, dissolution, or winding up is to take place and the date of
participation therein by the holders of the shares of Preferred Stock, if any such date is to be
fixed, and such notice shall be so given in the case of any action covered by clause (i) or (ii)
above at least ten calendar days prior to the record date for determining holders of the shares of
Common Stock or Preferred Stock for purposes of such action, and in the case of any such other
action at least ten calendar days prior to the date of such proposed action or the date of
participation therein by the holders of the shares of Preferred Stock, whichever is the earlier.




          (b) If a Section 11(a)(ii) Event occurs, then (i) the Company shall as soon as practicable
thereafter give to the Rights Agent and each holder of a Rights Certificate, to the extent feasible
and in accordance with Section 25 hereof, a notice of the occurrence of such event, which shall
specify the event and the consequences of the event to holders of Rights and (ii) all references in
Section 24(a) hereof to shares of Preferred Stock shall be deemed thereafter to refer to shares of
Common Stock or, if appropriate, other securities.




     Section 25 Notices.



          (a) Notices or demands authorized by this Agreement to be given or made by the Rights Agent or
by the holder of any Rights Certificate to or on the Company shall be sufficiently given or made
(a) immediately, if made by personal delivery, (b) on the fifth calendar day if sent by first-class
mail, postage prepaid, (c) the next Business Day if by nationally recognized overnight courier or
(d) upon confirmation, if transmission by facsimile is combined with a phone call to the Company
notifying it of such transmission, all addressed (until another address is filed in writing by the
Company with the Rights Agent) as follows:




30









 







D.R. Horton, Inc.

301 Commerce Street, Suite 500

Fort Worth, Texas 76102

Attention: Chief Legal Officer

Telephone: (817) 390-8200

Facsimile: (817) 928-6120




          (b) Subject to the provisions of Section 20 hereof, any notice or demand authorized by this
Agreement to be given or made by the Company or by the holder of any Rights Certificate to or on
the Rights Agent shall be sufficiently given or made (a) immediately, if made by personal delivery,
(b) on the fifth calendar day if sent by first-class mail, postage prepaid, (c) the next Business
Day if by nationally recognized overnight courier or (d) upon confirmation, if transmission by
facsimile is combined with a phone call to the Rights Agent notifying it of such transmission, all
addressed (until another address is filed in writing by the Rights Agent with the Company) as
follows:



American Stock Transfer & Trust Company, LLC

59 Maiden Lane

New York, New York

Attention: Client Administrator

Telephone: (718) 921-8521

Facsimile: (718) 765-8741




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




     Section 26 Supplements and Amendments. Except as otherwise provided in this Section 26, for
so long as the Rights are redeemable pursuant to Section 22 hereof, the Company may in its sole and
absolute discretion, and the Rights Agent shall, if the Company so directs, supplement or amend any
provision of this Agreement in any respect without the approval of any holders of Rights. From and
after the time at which the Rights cease to be redeemable pursuant to Section 22 hereof, the
Company may and the Rights Agent shall, if the Company so directs, supplement or amend this
Agreement without the approval of any holders of Rights in order (i) to cure any ambiguity, (ii) to
correct or supplement any provision contained herein which may be defective or inconsistent with
any other provisions herein, (iii) to shorten or lengthen any time period hereunder or (iv) to
amend or supplement the provisions hereunder in any manner which the Company may deem necessary or
desirable; provided, however, that no such supplement or amendment shall adversely
affect the interests of the holders of Rights (other than an Acquiring Person or any Affiliate or
Associate of an Acquiring Person or certain of their transferees), and no such amendment may cause
the Rights again to become redeemable or cause this Agreement again to become amendable other than
in accordance with this sentence. Upon the delivery of a certificate from an appropriate officer
of the Company which states that the proposed supplement



31









 







or amendment is in compliance with the terms of this Section 26, the Rights Agent shall
execute such supplement or amendment; provided, that any supplement or amendment that does
not amend Section 17, Section 18, Section 19 or Section 20 hereof in a manner adverse to the Rights
Agent shall become effective immediately upon execution by the Company, whether or not also
executed by the Rights Agent. Notwithstanding anything herein to the contrary, the Rights Agent
shall not be obligated to enter into any supplement or amendment that affects the Rights Agent’s
own right, duties, obligations or immunities under this Agreement.



     Section 27 Successors. All the covenants and provisions of this Agreement by or for the
benefit of the Company or the Rights Agent shall bind and inure to the benefit of their respective
successors and assigns hereunder.



     Section 28 Determinations and Actions by the Board.



          (a) For all purposes of this Agreement, any calculation of the number of shares of Common
Stock or any other class of capital stock outstanding at any particular time, including for
purposes of determining the particular percentage of such outstanding shares of Common Stock of
which any Person is the Beneficial Owner, shall be made in accordance with the provisions of
Section 382 of the Code, or any successor provision or replacement provision.




          (b) The Board shall have the exclusive power and authority to administer this Agreement and to
exercise all rights and powers specifically granted to the Board or to the Company, or as may be
necessary or advisable in the administration of this Agreement, including, without limitation, the
right and power to (i) interpret the provisions of this Agreement, and (ii) make all determinations
and calculations deemed necessary or advisable for the administration of this Agreement (including,
without limitation, a determination to redeem or not redeem the Rights or amend this Agreement).




          (c) All such actions, calculations, interpretations and determinations which are done or made
by the Board in good faith shall be final, conclusive and binding on the Company, the Rights Agent,
the holders of the Rights and all other parties. Unless otherwise notified, the Rights Agent shall
always be entitled to assume that the Board acted in good faith and the Rights Agent shall be fully
protected and shall incur no liability in reliance thereon.




     Section 29 Benefits of this Agreement. Nothing in this Agreement shall be construed to give
to any Person other than the Company, the Rights Agent and the registered holders of the Rights
Certificates (and, prior to the Distribution Date, registered holders of shares of Common Stock)
any legal or equitable right, remedy or claim under this Agreement; but this Agreement shall be for
the sole and exclusive benefit of the Company, the Rights Agent and the registered holders of the
Rights Certificates (and, prior to the Distribution Date, registered holders of shares of Common
Stock).



     Section 30 Severability. If any term, provision, covenant or restriction of this Agreement is held
by a court of competent jurisdiction or other authority to be invalid, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated; provided,
however, that notwithstanding anything in this Agreement to the contrary,



32









 







if any such term, provision, covenant or restriction is held by such court or authority to be
invalid, void, or unenforceable and the Board determines in its good faith judgment that severing
the invalid language from this Agreement would adversely affect the purpose or effect of this
Agreement, the right of redemption set forth in Section 22 hereof shall be reinstated and shall not
expire until the Close of Business on the tenth Business Day following the date of such
determination by the Board.



     Section 31 Governing Law. This Agreement, each Right and each Rights Certificate issued
hereunder shall be deemed to be a contract made under the laws of the State of Delaware and for all
purposes shall be governed by and construed in accordance with the laws of such State applicable to
contracts made and to be performed entirely within such State.



     Section 32 Counterparts; Facsimiles and PDFs. This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to be an original, and
all such counterparts shall together constitute but one and the same instrument. A facsimile or
        .pdf signature delivered electronically shall constitute an original signature for all purposes.



     Section 33 Descriptive Headings. Descriptive headings of the several sections of this
Agreement are inserted for convenience only and shall not control or affect the meaning or
construction of any of the provisions hereof.



[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]




33









 








     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed, all as
of the day and year first above written.



	 	 	 	 	 
	 	 	D.R. HORTON, INC.
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Bill W. Wheat
	 

	 	 	 	 
	 

	 	 	 	Bill W. Wheat
	 

	 	 	 	Executive Vice President and
	 

	 	 	 	Chief Financial Officer
	 
	 	 	 	 
	 	 	AMERICAN STOCK TRANSFER & TRUST COMPANY, LLC
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Herbert J. Lemmer
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	Name:
	 	Herbert J. Lemmer
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	Title:
	 	Vice President
	 

	 	 	 	 





Signature Page to Section 382 Rights Agreement

















 





Exhibit A




FORM OF

CERTIFICATE OF DESIGNATION, PREFERENCES, AND

RIGHTS OF SERIES A JUNIOR PARTICIPATING PREFERRED STOCK




of




D.R. HORTON, INC.




     Pursuant to Section 151 of the General Corporation Law of the State of Delaware:



     D.R. Horton, Inc., a corporation organized and existing under the General Corporation Law of
the State of Delaware (the “Corporation”), in accordance with the provisions of Section 103
thereof, DOES HEREBY CERTIFY:



     That pursuant to the authority conferred upon the Board of Directors by the Amended and
Restated Certificate of Incorporation of the Corporation, as amended (the “Certificate of
Incorporation”), the said Board of Directors on August 19, 2009, adopted the following
resolution creating a series of Preferred Stock designated as Series A Junior Participating
Preferred Stock (as hereinafter defined):



     RESOLVED, that pursuant to the authority vested in the Board of Directors of the Corporation
in accordance with the provisions of its Certificate of Incorporation, a series of Preferred Stock
of the Corporation be and it hereby is created, and that the designation and amount thereof and the
voting powers, preferences and relative, participating, optional and other special rights of the
shares of such series, and the qualifications, limitations, and restrictions thereof are as
follows:



     Section 1. Designation and Amount. The shares of such series shall be designated as
“Series A Junior Participating Preferred Stock” and the number of shares constituting such series
shall be 50,000.



     Section 2. Dividends and Distributions.



          (A) Subject to the prior and superior rights of the holders of any shares of any series of
Preferred Stock ranking prior and superior to the shares of Series A Junior Participating Preferred
Stock with respect to dividends, the holders of shares of Series A Junior Participating Preferred
Stock, in preference to the holders of shares of Common Stock, par value $0.01 per share, of the
Corporation (the “Common Stock”), and of any other junior stock, shall be entitled to
receive, when, as and if declared by the Board of Directors out of funds legally available for the
purpose, quarterly dividends payable in cash on the last day of March, June, September, and
December in each year (each such date being referred to herein as a “Quarterly Dividend Payment
Date”), commencing on the first Quarterly Dividend Payment Date after the first issuance of a
share or fraction of a share of Series A Junior Participating Preferred Stock, in an amount per
share (rounded to the nearest cent) equal to the greater of (a) $1.00 or (b) subject to the
provision for adjustment hereinafter set forth, 10,000 times the aggregate per share amount of all
cash dividends, and 10,000 times the aggregate per share amount (payable in kind) of all non-



A-1









 






cash dividends or other distributions, other than a dividend payable in shares of Common Stock
or a subdivision of the outstanding shares of Common Stock (by reclassification or otherwise),
declared on the Common Stock since the immediately preceding Quarterly Dividend Payment Date, or,
with respect to the first Quarterly Dividend Payment Date, since the first issuance of any share or
fraction of a share of Series A Junior Participating Preferred Stock. In the event the Corporation
shall at any time after August 19, 2009 (the “Rights Dividend Declaration Date”) (i) pay
any dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the outstanding
Common Stock, (iii) combine the outstanding Common Stock into a smaller number of shares or
(iv) issue any shares of its capital stock in a reclassification of the outstanding shares of
Common Stock (including any such reclassification in connection with a consolidation or merger in
which the Corporation is the continuing or surviving corporation), then in each such case the
amount to which holders of shares of Series A Junior Participating Preferred Stock were entitled
immediately prior to such event under clause (b) of the preceding sentence shall be adjusted by
multiplying such amount by a fraction the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of which is the number of shares
of Common Stock that were outstanding immediately prior to such event.




          (B) The Corporation shall declare a dividend or distribution on the Series A Junior
Participating Preferred Stock as provided in Paragraph (A) above immediately after it declares a
dividend or distribution on the Common Stock (other than a dividend payable in shares of Common
Stock); provided that, in the event no dividend or distribution shall have been declared on
the Common Stock during the period between any Quarterly Dividend Payment Date and the next
subsequent Quarterly Dividend Payment Date, a dividend of $1.00 per share on the Series A Junior
Participating Preferred Stock shall nevertheless be payable on such subsequent Quarterly Dividend
Payment Date.




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




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



A-2









 





          (A) Subject to the provision for adjustment hereinafter set forth, each share of Series A
Junior Participating Preferred Stock shall entitle the holder thereof to 10,000 votes on all
matters submitted to a vote of the stockholders of the Corporation. In the event the Corporation
shall at any time after the Rights Dividend Declaration Date (i) declare any dividend on Common
Stock payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock, or
(iii) combine the outstanding Common Stock into a smaller number of shares, then in each such case
the number of votes per share to which holders of shares of Series A Junior Participating Preferred
Stock were entitled immediately prior to such event shall be adjusted by multiplying such number by
a fraction, the numerator of which is the number of shares of Common Stock outstanding immediately
after such event and the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.




          (B) Except as otherwise provided herein or by law, the holders of shares of Series A Junior
Participating Preferred Stock and the holders of shares of Common Stock shall vote together as one
class on all matters submitted to a vote of stockholders of the Corporation.





     (C) (i) If at any time dividends on any Series A Junior Participating Preferred Stock
shall be in arrears in an amount equal to six quarterly dividends thereon, the occurrence of
such contingency shall mark the beginning of a period (herein called a “default
period”) that shall extend until such time when all accrued and unpaid dividends for all
previous quarterly dividend periods and for the current quarterly dividend period on all
shares of Series A Junior Participating Preferred Stock then outstanding shall have been
declared and paid or set apart for payment. During each default period, all holders of
Preferred Stock (including holders of the Series A Junior Participating Preferred Stock)
with dividends in arrears in an amount equal to six quarterly dividends thereon, voting as a
class, irrespective of series, shall have the right to elect two directors.




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



A-3









 






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




     (iv) In any default period, the holders of Common Stock, and other classes of stock of
the Corporation if applicable, shall continue to be entitled to elect the whole number of
directors until the holders of Preferred Stock shall have exercised their right to elect two
directors voting as a class, after the exercise of which right (x) the directors so elected
by the holders of Preferred Stock shall continue in office until their successors shall have
been elected by such holders or until the expiration of the default period, and (y) any
vacancy in the Board of Directors may (except as provided in Paragraph (C)(ii) of this
Section 3) be filled by vote of a majority of the remaining directors theretofore elected by
the holders of the class of stock that elected the director whose office shall have become
vacant. References in this Paragraph (C) to directors elected by the holders of a
particular class of stock shall include directors elected by such directors to fill
vacancies as provided in clause (y) of the foregoing sentence.




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



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




A-4









 








     Section 4. Certain Restrictions.



          (A) Whenever quarterly dividends or other dividends or distributions payable on the Series A
Junior Participating Preferred Stock as provided in Section 2 are in arrears, thereafter and until
all accrued and unpaid dividends and distributions, whether or not declared, on shares of Series A
Junior Participating Preferred Stock outstanding shall have been paid in full, the Corporation
shall not:





     (i) declare or pay dividends on, or make any other distributions on, any shares of
stock ranking junior (either as to dividends or upon liquidation, dissolution, or winding
up) to the Series A Junior Participating Preferred Stock;




     (ii) declare or pay dividends on, or make any other distributions on, any shares of
stock ranking on a parity (either as to dividends or upon liquidation, dissolution, or
winding up) with the Series A Junior Participating Preferred Stock, except dividends paid
ratably on the Series A Junior Participating Preferred Stock and all such parity stock on
which dividends are payable or in arrears in proportion to the total amounts to which the
holders of all such shares are then entitled;




     (iii) redeem or purchase or otherwise acquire for consideration shares of any stock
ranking junior (either as to dividends or upon liquidation, dissolution, or winding up) to
the Series A Junior Participating Preferred Stock, provided that the Corporation may
at any time redeem, purchase, or otherwise acquire shares of any such junior stock in
exchange for shares of any stock of the Corporation ranking junior (either as to dividends
or upon dissolution, liquidation, or winding up) to the Series A Junior Participating
Preferred Stock; or




     (iv) redeem or purchase or otherwise acquire for consideration any shares of Series A
Junior Participating Preferred Stock, or any shares of stock ranking on a parity with the
Series A Junior Participating Preferred Stock, except in accordance with a purchase offer
made in writing or by publication (as determined by the Board of Directors) to all holders
of such shares upon such terms as the Board of Directors, after consideration of the
respective annual dividend rates and other relative rights and preferences of the respective
series and classes, shall determine in good faith will result in fair and equitable
treatment among the respective series or classes.



          (B) The Corporation shall not permit any subsidiary of the Corporation to purchase or
otherwise acquire for consideration any shares of stock of the Corporation unless the Corporation
could, under Paragraph (A) of this Section 4, purchase or otherwise acquire such shares at such
time and in such manner.




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



A-5









 







of Incorporation, or in any other Certificate of Designation creating a series of Preferred
Stock or any similar stock, or as otherwise required by law.



     Section 6. Liquidation, Dissolution, or Winding Up.



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




          (B) In the event, however, that there are not sufficient assets available to permit payment in
full of the Series A Liquidation Preference and the liquidation preferences of all other series of
preferred stock, if any, which rank on a parity with the Series A Junior Participating Preferred
Stock, then such remaining assets shall be distributed ratably to the holders of such parity shares
in proportion to their respective liquidation preferences.




          (C) In the event the Corporation shall at any time after the Rights Dividend Declaration Date
(i) declare any dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the
outstanding Common Stock, or (iii) combine the outstanding Common Stock into a smaller number of
shares, then in each such case the Adjustment Number in effect immediately prior to such event
shall be adjusted by multiplying such Adjustment Number by a fraction, the numerator of which is
the number of shares of Common Stock outstanding immediately after such event and the denominator
of which is the number of shares of Common Stock that were outstanding immediately prior to such
event.




     Section 7. Consolidation, Merger, etc. In case the Corporation shall enter into any
consolidation, merger, combination, or other transaction in which the shares of Common Stock are
exchanged for or changed into other stock or securities, cash, or any other property, then in any
such case the shares of Series A Junior Participating Preferred Stock shall at the same time be
similarly exchanged or changed in an amount per share (subject to the provision for



A-6









 







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



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



     Section 9. Ranking. The Series A Junior Participating Preferred Stock shall rank
junior to all other series of the Corporation’s Preferred Stock as to the payment of dividends and
the distribution of assets, unless the terms of any such series shall provide otherwise.



     Section 10. Amendment. At any time when any shares of Series A Junior Participating
Preferred Stock are outstanding, neither the Certificate of Incorporation of the Corporation nor
this Certificate of Designation shall be amended in any manner that would materially alter or
change the powers, preferences, or special rights of the Series A Junior Participating Preferred
Stock so as to affect them adversely without the affirmative vote of the holders of two-thirds or
more of the outstanding shares of Series A Junior Participating Preferred Stock, voting separately
as a class.



     Section 11. Fractional Shares. The Series A Junior Participating Preferred Stock may
be issued in fractions of a share that shall entitle the holder, in proportion to such holder’s
fractional shares, to exercise voting rights, receive dividends, participate in distributions, and
to have the benefit of all other rights of holders of Series A Junior Participating Preferred
Stock.



[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]




A-7









 





     IN WITNESS WHEREOF, D.R. Horton, Inc. has caused this Certificate of Designation to be signed
by the undersigned this ___ day of August, 2009.



	 	 	 	 	 	 	 
	 	 	D.R. HORTON, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 

	 	 






A-8









 





Exhibit B




FORM OF RIGHTS CERTIFICATE




			
	 	 	 
	Certificate No. R-
	 	                     Rights






     NOT EXERCISABLE AFTER AUGUST 19, 2019 OR EARLIER IF REDEEMED OR EXCHANGED BY THE COMPANY. THE
RIGHTS ARE SUBJECT TO REDEMPTION AND EXCHANGE AT THE OPTION OF THE COMPANY, ON THE TERMS SET FORTH
IN THE SECTION 382 RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES AS SET FORTH IN THE SECTION 382
RIGHTS AGREEMENT, RIGHTS THAT ARE OR WERE BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR ANY
AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE SECTION 382 RIGHTS
AGREEMENT) MAY BECOME NULL AND VOID.



RIGHTS CERTIFICATE




D.R. HORTON, INC.




     This certifies that                                         , or registered assigns, is the registered owner
of the number of Rights set forth above, each of which entitles the owner thereof, subject to the
terms, provisions, and conditions of the Section 382 Rights Agreement, dated as of August 19, 2009
(the “Rights Agreement”), between D.R. Horton, Inc., a Delaware corporation (the
“Company”), and American Stock Transfer & Trust Company, LLC (the “Rights Agent”),
to purchase from the Company at any time after the Distribution Date (as such term is defined in
the Rights Agreement) and prior to 5:00 p.m. (New York City time) on the Expiration Date (as such
term is defined in the Rights Agreement) at the office or offices of the Rights Agent designated
for such purpose, or its successor as Rights Agent, one ten-thousandth of a fully paid
nonassessable share of Series A Junior Participating Preferred Stock, par value $0.10 per share
(the “Preferred Stock”), of the Company, at a purchase price of $80.00 per one
ten-thousandth of a share of Preferred Stock (the “Purchase Price”), upon presentation and
surrender of this Rights Certificate with the Form of Election to Purchase and related Certificate
duly executed. If this Rights Certificate is exercised in part, the holder will be entitled to
receive upon surrender hereof another Rights Certificate or Rights Certificates for the number of
whole Rights not exercised. The number of Rights evidenced by this Rights Certificate (and the
number of one ten-thousandths of a share of Preferred Stock which may be purchased upon exercise
thereof) set forth above, and the Purchase Price set forth above, are the number and Purchase Price
as of the date of the Rights Agreement, based on the shares of Preferred Stock as constituted at
such date. All capitalized terms used herein but not defined herein shall have the meanings
ascribed to such terms in the Rights Agreement.



     As provided in the Rights Agreement, the Purchase Price, the number or kind of shares of
Preferred Stock (or other securities, as the case may be) which may be purchased upon the exercise
of the Rights evidenced by this Rights Certificate and the number of Rights outstanding are subject
to adjustment upon the occurrence of certain events.



     This Rights Certificate is subject to all of the terms, provisions and conditions of the
Rights Agreement, which terms, provisions and conditions are hereby incorporated herein by



B-1









 







reference and made a part hereof and to which Rights Agreement reference is hereby made for a
full description of the rights, limitations of rights, obligations, duties and immunities of the
Rights Agent, the Company and the holders of the Rights Certificates, which limitations of rights
include the temporary suspension of the exercisability of the Rights under the circumstances
specified in the Rights Agreement. Copies of the Rights Agreement are on file at the principal
executive offices of the Company and can be obtained from the Company without charge upon written
request therefor.



     Pursuant to the Rights Agreement, from and after the occurrence of any Person becoming an
Acquiring Person, any Rights that are beneficially owned by (i) any Acquiring Person (or any
Affiliate or Associate of any Acquiring Person), (ii) a transferee of any Acquiring Person (or any
such Affiliate or Associate) who becomes a transferee after the occurrence of such Person becoming
an Acquiring Person or (iii) a transferee of any Acquiring Person (or any such Affiliate or
Associate) who became a transferee prior to or concurrently with such Person becoming an Acquiring
Person pursuant to either (a) a transfer from the Acquiring Person (or any such Affiliate or
Associate)to holders of its equity securities or to any Person with whom the Acquiring Person has
any continuing agreement, arrangement or understanding, written or otherwise, regarding the
transferred Rights or (b) a transfer that the Board of Directors of the Company has determined is
part of a plan, arrangement or understanding which has the purpose or effect of avoiding certain
provisions of the Rights Agreement, will be null and void without any further action and any holder
of such Rights will thereafter have no rights whatsoever with respect to such Rights, whether under
any provision of the Rights Agreement or otherwise. From and after the occurrence of any Person
becoming an Acquiring Person, no Rights Certificate will be issued that represents Rights that are
or have become void pursuant to the provisions of the Rights Agreement, and any Rights Certificate
delivered to the Rights Agent that represents Rights that are or have become void pursuant to the
provisions of the Rights Agreement will be cancelled.



     This Rights Certificate, with or without other Rights Certificates, may be exchanged for
another Rights Certificate or Rights Certificates entitling the holder to purchase a like number of
one ten-thousandths of a share of Preferred Stock (or other securities, as the case may be) as the
Rights Certificate or Rights Certificates surrendered entitled such holder (or former holder in the
case of a transfer) to purchase, upon presentation and surrender hereof at the office or offices of
the Rights Agent designated for such purpose, with the Form of Assignment (if appropriate) and the
related Certificate duly executed.



     Subject to the provisions of the Rights Agreement, the Rights evidenced by this Rights
Certificate may be redeemed by the Company at its option at a redemption price of $0.00001 per
Right at any time prior to ten days after the Stock Acquisition Date. In addition, following the
time any person becomes an Acquiring Person, the Company may at its option exchange the Rights, in
whole or in part, for shares of common stock, Preferred Stock or other preferred stock having
equivalent rights, privileges and preferences as the Preferred Stock. The Rights Agreement may be
supplemented and amended by the Company, as provided therein.



     The Company is not required to issue fractional shares of Preferred Stock (other than
fractions which are integral multiples of one ten-thousandth of a share of Preferred Stock, which
may, at the option of the Company, be evidenced by depositary receipts) or other securities



B-2









 







issuable, as the case may be, upon the exercise of any Right or Rights evidenced hereby. In
lieu of issuing fractional shares of Preferred Stock or other securities, the Company may make a
cash payment, as provided in the Rights Agreement.



     No holder of this Rights Certificate, as such, will be entitled to vote or receive dividends
or be deemed for any purpose the holder of shares of the Preferred Stock or of any other securities
of the Company which may at any time be issuable upon the exercise of the Right or Rights
represented hereby, nor will anything contained herein or in the Rights Agreement be construed to
confer upon the holder hereof, as such, any of the rights of a stockholder of the Company or any
right to vote for the election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to receive notice of
meetings or other actions affecting stockholders (except as provided in the Rights Agreement), or
to receive dividends or subscription rights, or otherwise, until the Right or Rights evidenced by
this Rights Certificate have been exercised in accordance with the provisions of the Rights
Agreement.



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



[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]




B-3









 





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



Dated as of                     .




	 	 	 	 	 	 	 
	 	 	D.R. HORTON, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 





Countersigned:




AMERICAN STOCK TRANSFER & TRUST

COMPANY, LLC




	 	 	 	 	 
	By:
	 	 	 	 
	 

	 	 

Authorized Signature
	 	 






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[Form of Reverse Side of Rights Certificate]




FORM OF ASSIGNMENT




(To be executed by the registered holder if such

holder desires to transfer the Rights Certificate.)




     FOR VALUE RECEIVED                                                              hereby sells, assigns
and transfers unto
            
                       
              



      



(Please print name and address of transferee)




      




      



(Please spell out and include in numerals the

number of Rights being transferred by this Assignment)



of the Rights evidenced by this Rights Certificate, together with all right, title and interest
therein, and does hereby irrevocably constitute and appoint                                          Attorney, to
transfer the number of Rights indicated above on the books of the within named Company, with full
power of substitution.




Dated:                                         , ______




	 	 	 	 	 
	 

	 	 

Signature
	 	 






Signature Guaranteed:




B-5









 








Certificate




     The undersigned hereby certifies by checking the appropriate boxes that:



          (1) the Rights evidenced by this Rights Certificate [     ] are [     ] are not being sold,
assigned, and transferred by or on behalf of a Person who is or was an Acquiring Person or an
Affiliate or Associate of any such Acquiring Person (as such terms are defined pursuant to the
Rights Agreement); and




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




	 	 	 	 	 
	Dated:                                         , ___
	 	 	 	 
	 

	 	 

Signature
	 	 






Signature Guaranteed:



NOTICE




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



B-6









 





[Form of Reverse Side of Rights Certificate — continued]




FORM OF ELECTION TO PURCHASE




(To be executed by the registered holder if such holder desires to

exercise any or all Rights evidenced by the Rights Certificate.)




To: D.R. Horton, Inc.:




     The undersigned hereby irrevocably elects to exercise                                         
(                    ) Rights evidenced by this Rights Certificate to purchase the Preferred Shares
issuable upon the exercise of the Rights (or such other securities of the Company or of any other
person that may be issuable upon the exercise of the Rights) and requests that certificates for
such shares be issued in the name of and delivered to or that such shares be credited to the
book-entry account of:



      



(Please print social security or other identifying number)




      




      



(Please print name and address)




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



      



(Please print social security or other identifying number)




      




      



(Please print name and address)




Dated:                                         , _____




	 	 	 	 	 
	 
	 	 	 	 
	 

	 	 

Signature
	 	 






Signature Guaranteed:






B-7









 








Certificate




     The undersigned hereby certifies by checking the appropriate boxes that:



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




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




	 	 	 	 	 
	Dated:                                         , ___
	 	 	 	 
	 

	 	 

Signature
	 	 






Signature Guaranteed:




NOTICE




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



B-8









 





Exhibit C





UNDER CERTAIN CIRCUMSTANCES AS SET FORTH IN THE SECTION 382 RIGHTS
AGREEMENT, RIGHTS THAT ARE OR WERE BENEFICIALLY OWNED BY AN
ACQUIRING PERSON OR ANY AFFILIATE OR ASSOCIATE OF AN ACQUIRING
PERSON (AS SUCH TERMS ARE DEFINED IN THE SECTION 382 RIGHTS
AGREEMENT) MAY BECOME NULL AND VOID.



SUMMARY OF RIGHTS




     On August 19, 2009, the Board of Directors (the “Board”) of D.R. Horton, Inc., a
Delaware corporation (the “Company”), declared a dividend of one preferred share purchase
right (each, a “Right”) for each outstanding share of common stock, par value $0.01, of the
Company. The dividend is payable on August 31, 2009 to our stockholders of record as of the close
of business on August 31, 2009.



     This summary of rights provides only a general description and should be read together with
the Section 382 Rights Agreement, dated as of August 19, 2009, between the Company and American
Stock Transfer & Trust Company, LLC, as Rights Agent (the “Rights Agreement”). All
capitalized terms used herein but not defined herein shall have the meanings ascribed to such terms
in the Rights Agreement. Upon written request, the Company will provide a copy of the Rights
Agreement free of charge to any of its stockholders.



     Our Board adopted the Rights Agreement in an effort to protect stockholder value by attempting
to diminish the risk that our ability to use our net operating losses and unrealized losses
(collectively, the “NOLs”) to reduce potential future federal income tax obligations may
become substantially limited. We have experienced and continue to experience substantial operating
losses, including realized losses for tax purposes from sales of inventory and land previously
written down for financial statement purposes, which would produce NOLs. Under the Internal
Revenue Code and regulations promulgated by the U.S. Treasury Department, we may “carry forward”
these NOLs in certain circumstances to offset any current and future taxable income and thus reduce
our federal income tax liability, subject to certain requirements and restrictions. To the extent
that the NOLs do not otherwise become limited, we believe that we will be able to carry forward a
significant amount of NOLs, and therefore these NOLs could be a substantial asset to us. However,
if we experience an “ownership change,” as defined in Section 382 of the Internal Revenue Code, our
ability to use the NOLs, including NOLs later arising from sales of land and inventory previously
written down, may be substantially limited, and the timing of the usage of the NOLs could be
substantially delayed, which could therefore significantly impair the value of that asset. A
company experiences an “ownership change” for tax purposes if the percentage of stock owned by its
5% stockholders (as defined for tax purposes) increases by more than 50 percentage points over a
rolling three-year period.



     The Rights Agreement is intended to act as a deterrent to any person acquiring beneficial
ownership of 4.9% or more of our outstanding common stock within the meaning of the Internal
Revenue Code and the regulations promulgated thereunder without the approval of our Board.



C-1









 




Stockholders who beneficially own 4.9% or more of our outstanding common stock as of the close
of business on August 19, 2009 will not trigger the Rights Agreement so long as they do not acquire
any additional shares of our common stock at a time when they still beneficially own 4.9% or more
of our outstanding common stock. Our Board may, in its sole discretion, also exempt any person
from triggering the Rights Agreement.




     The Rights. Our Board authorized the issuance of one Right per each outstanding share of our
common stock payable to our stockholders of record as of the close of business on August 31, 2009.
One Right will also be issued together with each share of our common stock issued after August 31,
2009 but before the Distribution Date (as defined below) and, in certain circumstances, after the
Distribution Date. Subject to the terms, provisions and conditions of the Rights Agreement, if the
Rights become exercisable, each Right would initially represent the right to purchase from us one
ten-thousandth of a share of our Series A Junior Participating Preferred Stock, par value $0.10 per
share (the “Series A Preferred Stock”) for a purchase price of $80.00 (the “Purchase
Price”). If issued, each fractional share of Series A Preferred Stock would give the
stockholder approximately the same dividend, voting and liquidation rights as does one share of our
common stock. However, prior to exercise, a Right does not give its holder any rights as a
stockholder of the Company, including, without limitation, any dividend, voting or liquidation
rights.



     Initial Exercisability. The Rights will not be exercisable until the earlier of (i) ten
business days after a public announcement that a person has become an “Acquiring Person” by
acquiring beneficial ownership of 4.9% or more of our outstanding common stock (or, in the case of
a person that had beneficial ownership of 4.9% or more of our outstanding common stock as of the
close of business on August 19, 2009, by obtaining beneficial ownership of any additional shares of
our common stock) and (ii) ten business days (or such later date as may be specified by the Board
prior to such time as any person becomes an Acquiring Person) after the commencement of a tender or
exchange offer by or on behalf of a person that, if completed, would result in such person becoming
an Acquiring Person.



     We refer to the date that the Rights become exercisable as the “Distribution Date.”
Until the Distribution Date, our common stock certificates or the ownership statements issued with
respect to uncertificated shares of common stock will evidence the Rights. Any transfer of shares
of common stock prior to the Distribution Date will also constitute a transfer of the associated
Rights. After the Distribution Date, separate rights certificates will be issued and the Rights
may be transferred other than in connection with the transfer of the underlying shares of common
stock unless and until our Board has determined to effect an exchange pursuant to the Rights
Agreement (as described below).



     Flip-In Event. In the event that a person becomes an Acquiring Person, each holder of a
Right, other than Rights that are or, under certain circumstances, were beneficially owned by the
Acquiring Person (which will thereupon become void), will thereafter have the right to receive upon
exercise of a Right and payment of the Purchase Price, a number of shares of our common stock
having a market value of two times the Purchase Price. However, Rights are not exercisable
following the occurrence of a person becoming an Acquiring Person until such time as the Rights are
no longer redeemable by the Company (as described below).



C-2









 





     Redemption. At any time until ten calendar days following the Stock Acquisition Date, the
Board may redeem the Rights in whole, but not in part, at a price of $0.00001 per Right (the
“Redemption Price”). The redemption of the Rights may be made effective at such time, on
such basis and with such conditions as the Board in its sole discretion may establish. Immediately
upon any redemption of the Rights, the right to exercise the Rights will terminate and the only
right of the holders of Rights will be to receive the Redemption Price.



     Exchange. At any time after a person becomes an Acquiring Person, the Board may exchange the
Rights (other than Rights that have become void), in whole or in part, at an exchange ratio of one
share of common stock, or a fractional share of Series A Preferred Stock (or of a share of a
similar class or series of the Company’s preferred stock having similar rights, preferences and
privileges) of equivalent value, per Right (subject to adjustment). Immediately upon an exchange
of any Rights, the right to exercise such Rights will terminate and the only right of the holders
of Rights will be to receive the number of shares of common stock (or fractional share of Series A
Preferred Stock or of a share of a similar class or series of the Company’s preferred stock having
similar rights, preferences and privileges) equal to the number of such Rights held by such holder
multiplied by the exchange ratio.



     Stockholder Approval. The Company intends to submit the Rights Agreement for stockholder
approval at a meeting of stockholders of the Company.



     Expiration. The Rights and the Rights Agreement will expire on the earliest of (i) August 19,
2019, (ii) the time at which the Rights are redeemed pursuant to the Rights Agreement, (iii) the
time at which the Rights are exchanged in full pursuant to the Rights Agreement, (iv) the effective
date of the repeal of Section 382 of the Internal Revenue Code, or any successor provision or
replacement provision, if the Board determines that the Rights Agreement is no longer necessary for
the preservation of Tax Benefits, (v) the beginning of a taxable year of the Company for which the
Board determines that the Company has or will have no Tax Benefits and (vi) August 19, 2010 if
stockholder approval of the Rights Agreement has not been obtained.



     Anti-Dilution Provisions. Our Board may adjust the Purchase Price, the number of shares of
Series A Preferred Stock or other securities or assets issuable and the number of outstanding
Rights to prevent dilution that may occur as a result of certain events, including among others, a
stock dividend, a stock split or a reclassification of the Series A Preferred Stock or our common
stock. With certain exceptions, no adjustments to the Purchase Price will be required until
cumulative adjustments amount to at least 1% of the Purchase Price.



     Amendments. For so long as the Rights are redeemable, our Board may supplement or amend any
provision of the Rights Agreement in any respect without the approval of the holders of the Rights.
From and after the time the Rights are no longer redeemable, our Board may supplement or amend the
Rights Agreement only to cure an ambiguity, to alter time period provisions, to correct
inconsistent provisions, or to make any additional changes to the Rights Agreement which the
Company may deem necessary or desirable, but only to the extent that those changes do not impair or
adversely affect any Rights holder (other than an Acquiring Person or any Affiliate or Associate of
an Acquiring Person or certain of their transferees) and do



C-3









 







not result in the Rights again becoming redeemable or the Rights Agreement again becoming
amendable other than in accordance with this sentence.



     The Company has filed a copy of the Rights Agreement with the Securities and Exchange
Commission as an exhibit to a Form 8-A filed on August 20, 2009. In addition, a copy of the Rights
Agreement is available free of charge from the Company. This summary description of the Rights
does not purport to be complete and is qualified in its entirety by reference to the Rights
Agreement.




C-4